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OPINION

Don't stop believing

Don't stop believing
January 16, 2013
Don't stop believing

Talk of the risk rally having “gone too far” is misplaced, as I see it. I reckon Wall Street, London and Frankfurt are probably only in the middle stages of the move higher that began back in mid-November. Neither has this travelled far enough nor are there enough technical red lights flashing in order for me to think about calling a top. Strong, liquidity-fuelled rallies tend to persist for much longer than even the bulls expect. I have learnt the hard way about bailing out too early over the years. The DAX is on the verge of giving a repeat buy-signal on its swing-chart, which I would likely respect. The FTSE continues to look attractive to me too.

for analysis of some leading markets.

COMMODITIES OUTLOOK

09.48

Silver has reverted to an uptrend on its swing-chart, and could be joined shortly by gold. The last two swing-chart buy-signals like this in silver both gave way to decent gains, albeit not lasting ones. I would not be at all surprised if the same occurred this time round, with a tradable rally giving way to yet more losses. Only a lasting move above $34.50 would lead me to suspect that the larger uptrend in silver was getting underway again.

for analysis of some leading commodities and EURUSD.

WALL STREET OUTLOOK

13.11

How worried should we be by tech’s lack of leadership? The Nasdaq 100 has been lagging the S&P 500 at least since early September last year. Ideally, this index should be leading the way higher in a bull market, and therefore weakness can be interpreted as a negative omen. However, this is not the first time during the up-cycle that began in 2008-09 that the Nasdaq has lagged. It has suffered spells of underperformance in pretty much each of the years since then, all of which have been followed by another spell of outperformance. That is what I expect to happen this time round too. Until it actually begins, though, I am happier buying the Dow and S&P.

for analysis of the Wall Street indices.

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