There have been continued top extensions in US stock indices, now including one in the S&P 100:
These started to occur at the time we expected a fairly large turn, so we have advised selling short. The shelf-life of these signals is about three weeks, so as usual we are watching closely, to see whether some more serious weakness starts to develop. In the meantime, there have been other parts of the US market that have already been quite weak and that have made bottom signals. Pharma suffered from one of the periodic fits of anxiety that pervade that sector when it seems possible that the very high price of drugs in the US will finally get some government attention, and the price of gold mining stocks also slipped quite hard, despite the stable price of gold itself:
We show these two just to point out that it is not the whole market that seems expensive right now, but that a few strong sectors have pushed up the broader indices. We continue to believe that the longer-term outlook for stock prices in the US is that of a trading range, as it has been for the last fifteen months. The boundaries of the range are hard to establish (and may be erratic) so we will continue to try and identify opportunities to trade within it using our usual methods.
Elsewhere, energy prices also rose on yet more geopolitical concerns with a backdrop of tightening supply – the OPEC+Russia production curbs seem to be holding for now and the world market has pulled away from oversupply (also for now). This rise has produced a pair of top extensions in Brent futures, arguing that the market will stall hereabouts, as it is now doing. As usual, wait for signs that a ‘top’ has formed before selling short:
Finally, grain prices have continued weak in the face of good growing conditions and continued uncertainty about a resolution of the China/US trade spat. We have already pointed out that wheat made a weekly-scale bottom extension back in March, so this latest dip should be bought and now we have a daily-scale bottom extension in corn too, even though it is not in the nearer delivery months:
We continue to believe that crop commodity prices are generally ‘bumping along the bottom’ and so we continue to look for these opportunities to buy.
Apologies for the spate of old alert emails that we sent out in the last couple of days – we were buried in fake Russian accounts that swarmed our site and jammed our email server. The jam then broke, hence all the old messages. Sorry – fixed now.
All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com
