There have been a number of signals in markets in the last few days that indicate a turning point is imminent. First, the dollar index where we are seeing an intra-day extension (meaning the day isn’t over yet). Sell longs and go short.
Next, these four commodity contracts have all made daily-scale bottom extensions:
Which argues that the drop is overdone and will end or pause hereabouts.
There have also been bottom extensions in these German and French bonds:
And lastly, there were weekly-scale bottom extensions in several US equity indices last week. This period of weakness was originally signaled by weekly-scale top extensions and now we have the same signal in reverse:
This is much more difficult as a weekly signal is not very useful as a timing tool – one or two extra signals in a series can mean a big loss. The extension happened last Friday and prices are significantly below the lows of that week, for example. Still, it is another indication that this widespread market drop has taken prices too far, too soon. Don’t press on the short side of equities and try buying with close stops. You may need to try a few tries, but it’s worth the attempt. The same applies to these commodity markets (and probably to others too).
All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com
