Weekly Technical Analysis – Asset Markets Looking For A Trend – 1st June16

Another week rolls by and the recent bull rally takes a breath. This next wave is crucial and should determine whether we are still in a wave 4 or have already started a wave 5 of this asset bull market.

This week the Swiss team are on holiday and taking a well deserved break but looking at the levels we can see we no clear price conclusion to their discussion. Key levels are intact. Their bear case has not been turned over as yet.

Lets look through some key lead technical charts as regards breadth on the lead US indexes before considering sectors.

Breadth

Sp500, stocks above their 50dma

We got good price momentum and breadth on the April impressive rebound move leading to the April price high which was scored on fading momentum. Price fell over, based and has a attempt to make new highs. The momentum, thus far, has not stepped up.  Its true higher highs can occur on lower breadth and price momentum but it usually spells out that the move is weak and will fail. We have some key resistances above us here, this is clear. A weak breadth and price momentum move to clear these resistances is an unlikely probability given the technical damage over the last 18 months to lead US indexes.

Here the nas100

And here the wider NYSE index

The NYSE looks far from convincing on the latest bounce but its true that across the US indexes given the momentum in price and breadth that this is giving the appearance that we have a wave five continuation in play.

It would be amiss to not mention the Russel2000. The 2000 is a good gauge of the US domestic economy. Price wise she has surpassed her April level with excellent price momentum. Given the Sp500 and Nasdaq strength and intact bull trends with the Russel2000 joining if a only a few other key indexes can fall into place it would shift any residual doubts on this move.

Sectors wise:

Soxx looks extremely good and has scored a higher high of the April level. According to the Soxx we have a revival in the world economy. Broker index has not as yet but has price momentum and today’s reversal at a key breakout area of the down trend looks promising for bulls. The US Banking index scored a higher high of the April level, just and an unconvincing way but has a wonderful reversal today and so is showing a pattern long for bulls to join. Us health care no higher high of the April level but momentum here. Biotech has a downtrend breakout but not as yet a higher high of the April level. Extremes of momentum though and today’s continuation a clear attempt at the april high here under way. Housing and consumer discretionary not made it beyond their April highs either as yet, two sectors that should be leading this as manufacturing is not performing well.

Of course taking the other side of things the Dow Jones Transports still look very sick here and look about to roll over.

Defensive sectors like utilities are close to making new highs. The USDJPY pair is still seeing a great deal of Jpy strength. Dax still hasn’t broken her down trend (needs to clear the 10,400 level) and EuroStoxx50 scored momentum in the last week. Tomorrow a reversal of today so look as though they could have an attempt at the April here.

The Ftse100 remains very weak. Oil is lacking momentum and looks about to rollover.

The crucial and probably extremely sick euro bank sector has failed thus far to breakout of her down trend. She has momentum on her recent wave which has subsided. She is primed for an attack on this key resistance area and on the daily scored a long signal today. Lets see whether the weight is with buyers or sellers here. She needs to clear 11.3 on the EXX1 etf if you are trading her using the etfs.

Overall a bull move is in process. Generally indexes and sectors have scored price momentum in the last week and with today’s reversal it is likely some key levels will come into play in the next week. Of course if this is a high momentum attempt “from failed moves come fast moves” so we see how this plays out. For the moment we have pattern longs.

Here UBS asset management providing their June monthly view:

ubs-monthly-june16

Here Fitzpatrick:

cb-Weekly_Roundup-26-5-16

GS are also on holiday this week

Here MS with their weekly FX run through:

ms-fx-28-5-16

Some euro debasement but nothing convincing on this front. US$ weakness vs nok cad.

Here Commerz out today with their technical report on gold.

Commerzgold-1-6-16

Here wf with their upbeat macro analysis of the recent data:

wf-weekly-20160527

I out of time but price should show the way shortly and hopefully pre summer.

All the best guys

Rich