Over time, there is more money to be lost by joining trends too early than there is to be made. Traders too often make the mistake of trying to call the big turning-points in the market, whereas the name of the game is to participate once a new trend has established itself. Yesterday’s big move up in the FTSE looked like the real deal in many respects. The surge was similar to the sorts of bounce that have kicked off previous legs higher during the present bull market. One slight concern is that traded volumes did not confirm the buying. However, I am not here to nit-pick. If the upside continues today, I shall be looking to join in.
Click here for analysis of some leading European markets.
The bounce in commodities yesterday was impressive. I do not blame myself for not seeing it coming, as it emerged pretty much out of the blue. By contrast, the equity indices were generally already very oversold, which made for better odds of a strong snapback. Still, my attitude in both cases now is very much the same. While I cautiously welcome the renewed strength, I am not quite ready to declare this the real deal. My call is for commodities to enjoy a late 2012 burst of strength, along with stocks. Some more convincing follow-through today could do the trick for me, though.
Click here for analysis of commodities and EURUSD.
WALL STREET OUTLOOK
I went into yesterday looking for short positions on renewed weakness but never got the opportunity to do a bearish trade. In the event, Wall Street powered upwards, building on its gains of Friday. While these are still early days, two days of strength are enough to convince me, given my bullish bigger-picture outlook. What is more, we got one of my favourite set-ups in the Nasdaq 100, the index that I like to see leading the way in genuine rallies. The tech market opened significantly above Friday’s highs, creating a gap on the daily chart. This is a common feature of early-stage rallies. I am therefore on the lookout for longs once more.
Click here for analysis of the Wall Street indices.
MORE FROM DOMINIC PICARDA...
Dominic Picarda is a Chartered Market Technician and has co-ordinated the IC's trading coverage since 2006. He is a regular speaker at trading and investment events and also holds the Chartered Financial Analyst qualification.
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