The rally in equities is in good shape. Further gains on Thursday and Friday have given the charts an even more bullish feel, at least when it comes to the price action. Volumes, however, continue to wither on the vine. The number of shares changing hands in London has fallen for three days in a row. Friday’s volumes were not far off what one would expect to see around Christmas, which is still a month or so away.
I am not getting put off by this apparent lack of conviction in the rally. I reckon that equities have yet more scope to go higher in the near term. The same applies to EURGBP and GBPUSD. These moves upward are still only in their early stages.
Click here for analysis of some leading European markets.
I definitely like the look of what’s going on in EURUSD. While it is possible for commodities to rally against the backdrop of dollar robustness, it is much easier for them to do so when the greenback is weakening. And that is what is happening now, and gold and silver are responding positively. I am much more attracted to the precious metals than I am to Brent and copper right now, the latter two having much less sexy charts.
Click here for analysis of commodities and EURUSD.
WALL STREET OUTLOOK
The price-action in the US indices is plainly bullish. At the forefront of the charge has been the Nasdaq 100, which gapped higher on Friday. I love it when the tech market lights the way. The indices have moved upwards in strong, confident fashion, while their pullbacks have been mild and shallow. This, too, is something that suggests that there is plenty more upside to come.
If I have a worry right now, it is the same as for the UK and Europe. The volumes in New York have shrunk progressively since last week’s lows, see lower panel below. I suppose holiday factors have a part to play here, so I am trying not to concern myself too much. The entire post-March 2009 rally has been characterised by diminishing volumes, so far without ill effect. I am looking for longs once more.
Click here for analysis of some leading US 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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