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OPINION

Waiting for DAX to join in

Waiting for DAX to join in
January 22, 2013
Waiting for DAX to join in

The rallies in the FTSE 100 and EURGBP show few signs of running out of steam, despite both being very overbought right now. In really strong trends like these, there is always the danger of bailing out too early. The correct approach is therefore to try and keep taking small long positions until there are definitive signs of reversal. I am tempted to go after the DAX a bit more, given its failure to join in properly so far. Before doing so, however, it too needs to show some legs. The case for German equities is at least as good as that for the UK market. Catch-up will follow.

for analysis of some leading European markets.

COMMODITIES OUTLOOK

09.27

I am not convinced that the recent upwards progress of commodities and EURUSD has yet run its course. While it is possible that a top has formed, it would be an atypical one, given the lack of overboughtness or negative divergence. As such, I am expecting a fairly swift recovery from this morning’s wobbles. Silver, copper and EURUSD remain the most appealing to me, in that order.

for analysis of some leading commodities and EURUSD.

WALL STREET OUTLOOK

12.10

The pre-hours weakness in the US indices is most likely a buying-opportunity, rather than the start of anything more sinister. The important thing at moments like this is to step back and consider the state of the daily and weekly charts. On neither horizon does Wall Street look as if it is topping out.

The bears are likely to seize upon the set-up in evidence in the Nasdaq 100, where an argument could be made that a “head-and-shoulders” type formation could be building. However, this involves a great deal of prognostication, as there is a long way to go before such a pattern properly triggered.

I seek longs in the S&P and Dow for now.

for analysis of the US indices.

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