No low yet

EUROPEAN OUTLOOK

07.47

I said on Friday morning that short positions were still the way to go with the DAX and the FTSE, and so it proved. The European indices are now approaching oversold levels on their daily charts, just as their US counterparts did some time ago. What I would stress is that the first incidence of oversoldness typically does not mark the lows of the move down. Since 2009, the DAX has become oversold five times, but only twice did it rebound directly from the point at which it recorded its lowest RSI reading. Some patience will be required here, therefore. I am still looking for shorts today.

Click here for analysis of some leading European markets.

COMMODITIES OUTLOOK

10.56

The commodities I cover are in a messy state right now. The swings in both directions over the last few sessions have made it fairly tricky to trade. One explanation here is that they may be forming a low of sorts. Volatility is often a feature of tops and bottoms in markets. Such reasoning would be more convincing were these materials already oversold, which in most cases they are not. So, my call for now is essentially more of the same: choppiness, with a bit of a downward bias.

Click here for analysis of some leading equity indices.

WALL STREET OUTLOOK

13.10

One swallow does not a summer make. And one half-decent session of buying does not add up to a case for calling the bottom of a sell-off. True, the stars are beginning to align in this regard. Sentiment and daily momentum have both reached levels that often precede a significant low. However, I need to see more upside than we have so far experienced in order to turn outright bullish once more. My big-picture view remains optimistic, but my near-term stance is still negative. I would aim to short any sharp reversal lower today, therefore.

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