One of the Chinese equity indices that we follow has mad a daily-scale top extension overnight. There have been a couple of others in Asia in the last few days, including a weekly-scale version in Thailand – charts:
This adds fuel to our view that the current rally in stocks will stall hereabouts, but as ever when using top extensions be careful as they often mark the start of ‘topping’ process that may take a little while to complete.
If you took some profits on the dip in the S&P, there will soon be a time to re-short. If you are aggressive, do it now.
We scratched our long positions in cotton and coffee as they both fell back trough our entry levels and will look to re-establish in the near future – particularly in coffee, as there are monthly-scale bottom extensions, as reported in the October 16th edition.
All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com
