Yesterday’s further drop in US stock markets produced the first bottom extensions we have seen in this current price tumble. Transport, Airlines (not shown) Asset Managers and ‘General Financial’ were the sectors concerned, as shown here:
These last two are extra sensitive to the general condition of equity markets, so these sector index extensions (which demonstrate an extreme of sentiment) are another clue that the panic is overdone. This first clue was a series of extensions reported yesterday in the various ‘flight assets’ that have been pushed up by the news of a vote for the UK to leave the EU. This second round of extensions strengthens the case for buying US (and maybe other) equities but we still wait.
