Despite another day of weakness, European equity indices are looking much less battered than their US counterparts. The DAX and FTSE are really nowhere near the oversold levels that Wall Street has already reached. In one sense, the European indices’ resilience makes them more attractive in the near term. However, I reckon the US markets will offer the better opportunities when the coming rally begins. For now, I am looking for further short trades in DAX and FTSE, and also in EURGBP.
for analysis of some European markets.COMMODITIES OUTLOOK
10.00
I was right not to jump in upon yesterday morning’s early signs of life in commodities. As I expected, the rally quickly expired and the main materials covered here are now destined for yet further weakness. I only wish I had been as discerning about EURUSD, whose strength I mistook for the real deal. I had thought that it might continue its recent habit of rising even while commodities were falling. Anyway, I am now once again looking for shorts in this market too.
for analysis of some leading commodities and EURUSD.WALL STREET OUTLOOK
13.48
Decent rallies in the indices often start from oversold or near-oversold levels on the daily chart. The Nasdaq 100 is clearly already oversold or thereabouts, given its daily RSI reading of just 33%. However, the lowest reading in the RSI frequently does not mark the absolute lows in the price. Back in June, for example, the tech index’s bottom came after the RSI had already begun to recover. Were such “positive divergence” to flash up in the near future, it would make me even more confident about buying into the coming rally.
Failing a big move up today, however, my bias for the meantime is towards further shorts.
for analysis of the US indices.
