China first. We have been long-term bulls since our May 8th edition (which might be worth re-reading) in which we reported a monthly-scale signal that was pointing higher. That bullish signal will continue to be ‘in date’ until end 2022 but of course there will be wiggles along the way, which we will try to catch as best we can. Here’s an update at the three main time frames, starting with monthly:
Which shows that there is no reason to change that longer-term advice. In fact the move up from the monthly compression shown in the first chart above is just beginning.
These next weekly charts show how the move up was also signaled by the upward break of a series of weekly-scale compressions that formed at the same time as the single monthly version (this doesn’t always happen by the way) and how that ‘leg’ up ended at a weekly-scale top extension. These signals happened in different indices, which is why we follow so many – it is quite rare for things to line up precisely enough to generate a signal.
That top extension lapsed after the usual 16 or so periods and the up move resumed:
Now, although there is no China-specific signal, we are seeing top extensions in a number of other Asian indices, including Hong Kong and (shhh!) Taiwan too:
These are at a daily scale, so probably won’t case too much trouble to the main China bull move, but they are pervasive so it looks like these markets will dip or pause here for up to three weeks. If you are busting to try a short, feel free and we suspect that Japan might be the best prospect for this in Asia.
Elsewhere, the top signals reported in US equity indices in the November 9th edition did indeed coincide with the rally highs of the main indices that we follow. A second attempt at those highs failed in all four of the main ones (S&P, Nasdaq 100, Dow and MidCap) and the signals still have up to two weeks of ‘shelf life’ left. Stay short or perhaps better still, trade from the short side, as a trading range is quite a likely outcome from such a signal. An update, using the example of Dow futures:
Meanwhile, we have been looking at energy prices. The main point to make is that crude oil is compressing at a weekly scale in both Brent and WTI futures, as it trades in quite a tight range. We are always reluctant to call for a new direction in prices when a compression is forming and this situation is no exception. It is a reflection of pressure building up, so be alert for any sudden move as it could be the start of something bigger:
More soon on other commodities, as we catch up after our data famine.
All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com
