BullBear Trading: Stock and Financial Market Technical Analysis

Here's the introduction to the latest BullBear Market Report:


The fear of a disruptive pan-Arabic revolution appears to have triggered a correction in world equities markets. Today’s high marked the B wave of an ABC corrective pattern and C down is now underway. My take at this time is that the downward correction is not yet over and a better buying opportunity lies ahead. While there is some risk of a resumption of the bear market it does not appear to be high at this time. Analysis suggests that we are in a relatively minor correction within the context of a larger bull trend.  The current decline is most likely a correction of the move from September to February.

Having said that, there are some signs of danger for world equities. The divergence between developed market equities and emerging markets persists, with many key EM indices showing signs of potentially rolling over into bear markets.

The US Dollar Index bears watching at this time. Very long term, long term and intermediate term charts are all playing with breaks of support. The fact that the Dollar has refused to rally even as selling has hit world stock markets does not auger well.

Dollar sensitive commodities such as Crude Oil, Gold and Silver may be sniffing out a major downwards revaluation of the greenback. Crude and Silver appear to be in high level consolidations before a continuation. Gold is hovering just above an important resistance level and just below its all time highs.

US Treasuries have rebounded and broken their downtrend as stocks have faltered. There has been a nearly perfect inverse correlation between Treasuries and stocks. In my current view, we should be looking for the correction in bonds to end for a shorting opportunity in Treasuries and a buying opportunity in stocks.

Certainly the inflation profile does seem to be in effect at this time. Dollar and Treasuries weak, gold and crude oil strong, stocks strong but faltering; the message of the market may favor the inflationist view at this time. While a major breakdown could come in the dollar, this wouldn't be the first time that it has threatened a major decline and yet pulled back from the brink. Crude Oil has been news driven to the current breakout highs; news driven spikes can be reversed sharply. And it's possible that gold is putting in a fifth wave high here. But sometimes it just is what it is. With so many key markets hovering at critical levels, traders should look sharp and be ready. Tradeable moves may be in the near future of these markets.



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