The rally in stocks has lost a bit of momentum in the last few days and indeed there was a solitary daily-scale top extension in the Dow version of the Canadian national index:
This is thin evidence on which to become bearish, so we will just repeat the remarks the we made in the last edition on January 18th that stocks are in resistance in the US from nudging up into an old weekly-scale compression but we don’t have a large enough turn event due in these few days to warrant selling short – we like the coincidence of an extension or return-to-compression with a nice big turn to become aggressively bearish. Protect long-side profits that you may have from our recommendations at Christmas time, as also recommended in that January 18th edition.
It seems likely that a range will form hereabouts (i.e. a small trading range, within the much larger one that we think US stocks are still inhabiting) and so there is probably going to be two-way price movement up here for a while. That may eventually lead to some greater weakness but we don’t have enough evidence to ‘call for’ that yet.
More soon on Commodities.
All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com
