Another week quickly comes around and the major macro event, following on from the ultra easy ECB, was the soothing dovish Fed. Price has reacted positively for the bulls with the sp500 making margin new highs. World indexes not confirming the move although currency adjusted it looks better as the US$ has weakened a little. Breadth wise it is a little more positive across indexes and with a better reading of stocks above their 200 dmas and 52 wk highs.
However it doesn’t take much looking to see plenty of problems here. (And its correct to look for problems given the break of the bull trend across so many indexes and key cyclical sectors). There are so many not confirmations here within the US and worse outside. Price wise momentum has been weak. And very weak considering the news flow which has been ultra positive for stocks. Lead sector Index wise the Dow transports are not confirming, the Soxx semi conductors have just about made a new recent high but within a slightly rising channel, no break out of this channel as yet which is crucial.
Europe wise things look worse. Non confirmation of the beta indexes. Ibex35 is still lower than before Draghi and Yellen gave their speeches by the way. No breakout Dax or stoxx50. Lack of momentum across markets and some key cyclical sectors in big trouble inc euro banks which are dropping again like a stone. In spite of some renewed dollar weakness many commodities are again drifting lower inc oil.
No changes in my book of assets yet but i watching this carefully for obvious reasons. Its still too early to be aggressively short but taking profits appears wise to me. Eurusd at some key levels. Can the dollar index weaken and oil fall? I think so as the euro carry trade has been a crowded trade. If it comes alongside a risk off move it would be sweet indeed. Lets see.
I’m out time to comment here unfortunately so here the Swiss team
And here GS:
More reports coming later evening..
All the best
Rich