Still going up

Tops most usually seem to occur not when a market first becomes overbought, but when it is both overbought and its momentum is waning. Right now, the FTSE and EURGBP are overbought, but momentum – as measured by the daily RSI – is not yet waning. As such, they probably have scope to extend their recent run of gains a bit more before a more decent pullback occurs. The enigma for me remains the DAX, which is not joining in at the moment. I still think that it will do so in due course, but caution against jumping the gun. I continue to seek long positions in FTSE and EURGBP, and shorts in GBPUSD.

for analysis of some European markets.

Please note that the IC website does not alert me when a comment is left. If you want a guaranteed reply to your comment or query, please write to me at dominic.picarda@ft.com

COMMODITIES OUTLOOK

09.10

While gold has rallied decently enough in 2013 so far, it is important to keep an eye on the bigger picture. Despite the recent upside, the yellow metal’s price is still firmly within the declining channel that it has been in since the autumn. This is one clue that the larger correction that began in September 2011 remains in force. Another is that the rally this month has been much less sharp and thrusting than, say, even the ultimately abortive one that occurred last autumn - highlighted. The more attractive trading opportunity remains silver for now, in my eyes. I also think copper can go higher.

e for analysis of some leading commodities and EURUSD.

WALL STREET OUTLOOK

12.49

Once again, the bears have had their backsides handed to them on a plate. The US indices are breaking higher, particularly the S&P and Dow, which are both knocking on the door of 1500 and 14000 respectively. I attribute little significance to these big round-number levels, preferring to look at the more meaningful attributes such as overboughtness and sentiment. While the S&P and Dow are now slightly overbought on a daily view, this is normal and healthy at this stage. And I am not worried by the 30.9% gap between bulls and bears in the latest Investors Intelligence sentiment survey either. The warning lights are only flashing amber for now, so I continue to seek long positions.

for analysis of the Wall Street indices.