We have been pointing out for some time that US Equity indices are in a compressed condition. Compressions have been coming and going at both weekly and daily scales but we don’t report all of them as this is merely more evidence of the existing condition. Here is an update of the most well-defined of those signals, in a small-cap index:
The price is updated as of yesterday’s (18th January) close and it is sitting just about at the low points of the various signals that have been generated in the last 6 weeks. It hasn’t broken down below the compressed area, just as it didn’t break up when pushing at the highs two weeks ago. Common bearishness is growing in the marketplace, but we wait. It is worth pointing out that market mood swings can be at their most intense in a trading range – bullish at the high end, bearish at the low end and our shorter-term signals have been reflecting that, at hourly and other intra-day scales. It’s also worth repeating that there is a large hole under the market IF it should break downward.
Gold has been disappointing although we are still clinging to our bullish view. There was a group of compression signals abut ten days ago that broke upward last week and the area of those compressions was re-visited yesterday, where support was found, as usual:
It seems all the marketing puff about ‘digital currency being the new Gold’ that has sucked in so many unwary dupes may be cramping Gold’s style – it has been stuck in a trading range for some time. We expect this to abate at some time and meanwhile we are patiently long.
Lastly, Copper. This too has been range-bound for a long time but we can get tradeable signals in ranges. March futures compressed at a daily scale last week and that compression broke up. It is being re-visited in the last 24 hours and has found support at the compressed area, as we expect (and as it did at the level of the previous compression in mid-December). Buy, with stops some little distance below the lows of the 6th January.
All signals generated by software produced by our friends at Parallax Financial Research www.pfr.com
