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OPINION

Stretched markets

Stretched markets
January 28, 2013
Stretched markets

Having been left out of much of the fun and games since the start of 2013, the DAX has finally now got involved, as I had been predicting. The German index is much less stretched than the likes of the FTSE and its US counterparts, all of which are sporting very overbought daily RSI readings. EURGBP, meanwhile, is looking as extended as it was when it was almost at parity back in late 2008. Overall, I am becoming a bit more cautious now. At the very least, I’d wait for intraday pullbacks before trying to buy. And I think that a larger retreat could be on the cards before long, but only as a precursor to an ongoing bull market.

for analysis of some leading European markets.

COMMODITIES OUTLOOK

10.01

I am rather disappointed that Euro strength is not benefiting gold and silver. The precious metals lurched lower once more on Friday, even against a backdrop of further upside in the single currency. As a long-term bull on these commodities, I am forever on the lookout for the resumption of their major uptrend, which is more than a dozen years old. I firmly believe that this will occur in 2013 and am very happy taking investment positions at current levels. For trading purposes, however, I am much less enthusiastic. The clearest trends for me right now are EURUSD and Brent, both of which I’d sooner buy.

for analysis of some leading commodities and EURUSD.

WALL STREET OUTLOOK

12.17

There’s quite a bit of top-calling going on right now. I read, for example, that Friday was a turning-date in the Dow - http://t.co/sl59GwEC - and we are therefore in the right window for a high. And, just over three-quarters of IG Index’s clients are short of the S&P 500 right now, according to their Insight tool.

I am not really into top-calling, however, having learnt the hard way over the years. One must wait for the actual turn to begin. Technical analysis is about following trends, and not trying to be smarter than the market. As such, I would still be prepared to buy if either the S&P or Dow dips a little bit more on their intraday charts, and then rallied once more. I remain cold about the Nasdaq 100.

for analysis of some leading US indices.

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