I pointed out yesterday how the rally in equities has been accompanied by low and shrinking volumes. During the FTSE’s subsequent sell-off, volumes actually rose significantly from its levels of the two preceding days. This is not a bullish sign. Ideally, volumes ought to expand in the direction of the trend and recede as the market corrects, and not vice versa. However, I am unperturbed overall. The rally looks good from the perspective of price-action, which is the most important thing of all. With a further Greek bailout deal agreed, I can see the indices and the Euro continuing their recent gains.
Click here for analysis of some leading indices.
Assuming this rally in commodities is the real deal, I would expect quite a lot more to come. Despite their latest gains, none of the materials covered here has yet reached the sort of very stretched daily levels where an uptrend might run into difficulties. If EURUSD can continue to strengthen – as I am expecting it to – I reckon we could see further impressive gains. Copper in particular has good catch-up potential. Fears of a Chinese economic “hard landing” have been overdone, in my view. Here and now, gold, silver and EURUSD offer the best buying opportunities.
Click here for analysis of some leading commodities and EURUSD.
WALL STREET OUTLOOK
The rally on Wall Street is far from over, in my view. While the S&P, Dow, and Nasdaq 100 all remain in downtrends on their swing-charts, I would not dream of respecting this bearish message for now. The only logical strategy at present is going long, buying recoveries from the intraday dips. I am heartened by the shallowness of the pullback from the latest highs, which says to me that uptrend is still solidly in force. What is more, I believe that uptrend to be in its earlier stages. There is plenty more to come.
Click here for analysis of the 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.
■ Win £250 cash - Play our new Fantasy Shares Game on Facebook. It's free to enter and you could win one of four cash prizes.