While I wasn’t expecting yesterday’s lurch lower in the indices, it was a case of all’s well that ends well. The DAX and FTSE have since come roaring back and are well poised to reach the next set of targets that I had set. I see the indices’ prompt and decisive recovery as yet another reason to have faith in the rally that began around the middle of this month. I am therefore still seeking to buy them as they resurrect themselves after intraday dips.
Click here for analysis of some leading European markets.
Yesterday morning, I dismissed the likelihood of a “bearish rising wedge” pattern having formed on gold’s daily chart, and hence also the risk of a big lurch lower. Ooops! No sooner had I uttered those words, the yellow metal experienced a high-to-low move of 2.2%, its biggest down-day in almost a month. While it has since clawed back some of the lost ground, I am hardly blown away by the fashion in which it has done so. Still, I am not going bearish for now. I continue to see the potential for gains here, specifically as the US dollar sells off further. However, I need to see more of a recovery before actually trading again.
Click here for analysis of some leading commodities and EURUSD.
WALL STREET OUTLOOK
My decision to disregard Tuesday’s swing-chart sell-signal and yesterday’s signals in the S&P and Dow has been justified. The indices came roaring back to life yesterday, and their uptrend has plenty more to go yet, in my view. Admittedly, the general public is beginning to cotton on to this too, as evidenced by this week’s AAII survey, with lots of bears migrating to the bullish camp. However, sentiment overall remains restrained, as it often is in the EARLY STAGES of a significant rally. That’s where we are now, and I am only contemplating further long positions at this point.
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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