Some measures of the Nasdaq made new compressions yesterday as shown here- there are a few hours from today’s trading in the most recent bar:
This means that this market (which is making all the US signals) did not break in either direction yesterday, and that a general rally in both stocks and commodities is still possible. To repeat; we feel that the evidence is quite strong that a commodity rally is starting, especially in the ‘industrial’ commodities (energy and metals) but that the evidence for an equity rally is a bit weaker.
Nonetheless, we would not be short of US equities yet, in case there is ‘one more rally’ before expected declines set in. We would reduce long positions in Germany on rallies (this should already have been accomplished at much higher levels early in the month) and you should have replaced short positions in our favourite Southern European candidates of Spain, Italy, Greece and France as of the highs made at our April 11th edition (arrowed).
Those Spain and France shorts now have decent profits; Greece and Italy smaller ones. Protect these with close stops as any general rally now could rapidly erode these paper gains.
An equity rally would probably spark another sell-off in bonds. The top extensions that we saw in various US government debt instruments on the 5th April highs are still ‘in date’ despite the fact that prices have regained those highs:
These markets can still be sold for a trading turn and maybe more.
Nothing new to report in Asia.
RE
