Apologies guys for the delay, i’ve been traveling today.
Below we have another outstanding technical run through of the world’s major markets and instruments.
I don’t want to repeat the Swiss team’s comments so therefore i won’t cover the same ground but will try and add to their analysis below.
We are where we have been for several weeks but with added weakness in European indexes and the euro currency. We have a trend break for the crucial sxp7 (the euro banking index). Autos, industrials and materials the Swiss team cover. The issues on the EM indexes continue demonstrating continued non confirmation and weakness.
Here the HK Index as just one example. She scored her high, like many EM indexes back in early Feb.
Its worth commenting that given the weakness if the US indexes sustain some sort of technical bounce is in order for many EM indexes but trend lines and key supports have broken so more weakness is very likely on US weakness.
Tech comments always useful on the Shanghai index here: http://www.stocktiming.com/Shanghai_Daily_Stock_Market_Updates/shanghai-index-update-monday.htm
The inverse relationship between Nik225 strength and jpy is still at extremes with the jpy gradually appearing to be a strengthening phase, which should be bearish nik225 stocks. High yield across the world is still relatively weak and commodities enough said. I could go on for quite some time on the international inter market instruments and indicators that are not showing a healthy bias to the US indexes. It seems anything to do with the real economy in the non US world is suffering. Capital that is flowing is generally moving into defensive stocks and or German bunds.
Meanwhile this US bull leg is continuing to drift higher albeit with increasing volatility and on an increasingly mono line and narrowing basis, as we have picked up some weeks ago. The mono line US divergence has gained relative strength buoyed by her macro data of increasing house prices, increasing consumer borrowing and reduced savings. If the answer to sustainable GDP growth is consumer consumption via increasing balance sheet wealth from house and equity prices the US is in poll position to lead the world recovery onward.
Specifically, on the bull US case, we did score more strength and a higher high last Wednesday from the HGX (housing index) in the US. This is a key indicator for the US consumer. For now the price signal remains bullish. US finance failed to score a higher higher last week. She is in distribution for the moment but no clear indication of weakness as yet. The semi conductors the Swiss have covered. They did not mention the US treasuries that have also scored a non confirming inverse with the equities. Ie just as inflation has increased this week and the sp500 has scored a higher high the treasuries have bounced up indicating renewed economic fears. We should expect to see the opposite occur. (10 year bunds also made a record high this week its worth noting, normally a bearish equities event).
A few shorts on selected weak sectors is just fine as is taking some profit off the table on performing cyclical stocks, in my opinion. But until we see a clear price signal of weakness in key US sectors like housing and finance we cannot increase any short allocation for the moment. The Swiss team remain bullish the bullion. There emergence from their slumber is long awaited. US housing and finance aside the fiat world doesn’t appear in great shape though technically there is little to support the bullish bullion case until some high price resistances are broken.
The right course of action, thus far, has been to retain the high yield large cap stocks as these have given capital growth and yielded an income. Rather than liquidating them ahead of this key dividend period adding short cyclical targets, as they show price evidence, remains the focus with fx the continuing beta enabler with the Aud showing some renewed strength again vs the US$.
Without more delay here the report:
All the best
Rich
p.s. the Commerz bullion weekly tech report here below. They, like the Swiss team remain cautiously with a bullish bias on the asset class. I agree but the price action remains unconvincing for now.
BullionWeeklyTechnicals25032013
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