Two new signals to report. The Dow has outpaced other US indices in the most recent ‘leg’ up and it has now just produced top extension signals at a daily scale in the cash index (not shown) and the futures. This has the usual meaning – that the rise is getting tired and there may be a pause or setback from hereabouts. It does not mean that this index should be sold short immediately but you could try a short in something else that might suffer more if the Dow pauses – the S&P perhaps, or even the Nasdaq which is stalling at the rally highs of four days ago.Some European indices are also vulnerable here as they have been range-trading and have just tested the top end of those ranges.
The copper market made a compression yesterday, also at a daily scale and the price is currently trading just beneath that compressed level. It is dangerous to assume at this early point in the day that prices will close below that compression but if they do, there will probably be further weakness.
The price of copper may be vulnerable due to the increased (or rather, resumed) supply coming from BHP’s large Chilean mine, where a long strike ended in March. Restored production takes time to enter the market and there is little fanfare when it does…
All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com
