I am not particularly surprised that the DAX and FTSE are experiencing a bit of hesitation right now. Both indices are nearing significant levels on their price-charts, being the 2011 bull-market highs for the German index and the 2012 peak for the FTSE. It is only natural that investors should become a little cautious as such points approach, especially after a strong rally. Also, the week before the festive period often hosts weaker activity in equities, before the “Santa Claus” rally gets underway.
I am only really minded to treat any current weakness as a buying-opportunity in the making. Both the DAX and FTSE should break out to the upside before long in my view.
Click here for analysis of some leading indices
Copper’s blistering rally continues, in line with my recent call. For me, this remains the trade-of-choice right now among the commodities. Elsewhere, the action is either unconvincing (the precious metals) or erratic (Brent crude). Ultimately, I do envisage further gains in all of these materials this month, with EURUSD returning back above $1.30. For the moment, the red metal is the only one offering an obvious opportunity, however.
Click here for analysis of some leading commodities and EURUSD.
WALL STREET OUTLOOK
While the Nasdaq’s weakness continues to cause me concern, I think that the momentum on Wall Street remains with us bulls. Despite a couple of wobbles along the way over the last few days, the uptrend remains intact and probably only in its early to middle stages. Besides positive cyclicality, we have the prospect of a Santa Claus rally around the corner to look forward to. I can only really look for longs at this point, therefore, with the Dow continuing to look the best of the bunch in this regard.
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.
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