We recommended buying stocks on Monday 9th because of a big turn due that day which coincided with many markets dipping back to support at old compressions (update in the next charts). There has been a rally since the lows of that week, some of which were made on the 9th but more of which were made a couple of days later. The rally has been small so far.
Interestingly, some fresh equity index compressions have also appeared in the US but also in one measure of the Euro 350. The S&P500, Dow industrials and Nasdaq futures have all made daily-scale signals and we also have a new weekly-scale compression from the same Dow measure. This comes at a time when the Dow transport index is still compressed at a weekly scale and it too made a fresh signal last week.
This comes at a time when we are only a week away from a big turn that is due on Monday July 23rd with some spill-over into the next day. This is a full grade 1 turn in equity markets and many other markets are due to turn at the same moment – bonds, energy, grains and both base and precious metals. The current volatility may continue until then, but we still have a preference for US and European equity markets to rise from last week’s turn into this next one, which would then mark a high point. It is too early to be certain about this, so for now we would hold longs in the US and Europe with reasonably close stops. As usual, we prefer to be long of Germany than any other European alternative.
Elsewhere, copper has compressed and moved up, as cotton might also be doing. Cotton had fallen a lot, made a weekly-scale bottom extension and after a lot of sideways movement has now compressed and seems to be moving up out of that compression. Copper should be bought and cotton too IF it holds this initial move up. Crude oil made a weekly-scale bottom extension as we reported and then dipped from a near-term high point on July 5th, as we warned. The 'senior signal' there is still that bottom extension however and so the line of least resistance seems to be upward.
Nothing more on grains since our last report – daily-scale top extensions stalled the up-move in corn and wheat, both of which will probably keep rising when this short-term signal has 'worn off'. Soya meal has made a weekly-scale top extension though, so we think that it has very little more room to rise. We may try a 'short' here soon – probably in soya. We will advise.
Nothing further on bonds either – they went up in the US and Europe after breaking the compressions we showed recently. They are also due for turns next Monday/Tuesday, so we will watch until then.
