The drop and rally in stocks during the last week has now produced some compressions. There have been a few in European national stock indices and in US 30-year bonds. Here we show Germany as an example:
There have been compressions in a few sector indices in the US but none in the main traded indices. Here we show a couple to illustrate:
We still have an outstanding ‘short’ recommendation in stocks from the November 20th edition. As ever, when a compressed condition develops we expect prices to move in a new direction, starting imminently and this gives an opportunity to tighten protective stops on outstanding positions. We recommend doing that here and we will comment further as events unfold.
We have made no fixed income recommendations for many weeks and this new compression in US 30 year bonds may offer a chance to make one soon, once we see a clear break in one direction or the other.
