The ‘churn’ continues in equity markets, with no clear break into a new trend in either the US or China, where there were further weekly-scale compressions last week:
It is tempting to announce that the two US indices are ‘breaking upward’ as the activity this week has obviously taken them above the compressed levels of last week but we have learnt from long experience that prices must close outside the levels of a signal before we can consider a break to have occurred. It’s only Tuesday, so we must wait.
In Europe it is slightly different. There, some indices did move out of their weekly-scale compressions and closed above them. France did not however, as the last chart shows, so we wait here too:
The danger is that prices will break one way or another so quickly that we will miss the break and then have to wait for a ‘return to compression’. We may get some daily-scale signals before the weekend, so we will report if that occurs – it may give early warning.
Meanwhile, we are looking at commodities and will write on that topic soon.
