Weekly Technical Analysis – “Dec Overshoot Target S&P500 1850 …

Weekly Technical Analysis – “Dec Overshoot Target S&P500 1850 …

Here below the latest Swiss team’s technical weekly multi market comments and analysis.

The price trend work remains intact as does sentiment and sectoral work with the finance sector finally joining the break out sectors.

Europe, major index wise,  the Dax remains bullish (as does the ftse100) but the IBEX is theoretically the beta especially given the bias of the Swiss team to cyclical components.

The ftse20 to me looks a buy and should be a YE good beta to the major indexes. A good trading entry is likely to present soon on this index.

Commodities remain weak with oil a breakdown candidate moving in the opposite direction to her equity sector components note.

They remain constructive short term on the bullion and bearish US$ in terms of her recent price range, dx basket.

They don’t pick up the credit markets. Things have been heating up again until very recently but they remain within thresholds of normality for now. The compression on ‘junk bonds’ high yield remains in place and appears under no threat at present, price wise.

Its constructive stuff for the moment. YE nos window dressing should theoretically sustain a decent stretch into end Dec at least. Lets see how stretched things become before getting ahead of ourselves on the Jan14 consequences of this ‘stretch’.

Here the report:


And to deepen this regular technical analysis weekly post, a set of regular reports from Yardeni below.


We see the spread to financial indicators is immense and worryingly immense. On the other hand, price has not even paused to accept the current reality of these financial economic indicators. The spread is wide at present. How this resets we cannot know but there are clear risks here for equities to the downside. It is also possible that the economic indicators improve into the new year and that the spread narrows at a higher equity price level. Yes its possible in theory but the air is thin to the upside here unless the fundamental picture radically changes. There are no economic signals on the horizon to suggest this radical improvement. Sentiment work of put call, AAII (a little better), volatility, momentum work, market breadth work are all fairly poor and not confirming adequately the price moves and market internal moves we see before us. “YE stretch” captures the situation perfectly in my view. The S&p500 is now 9% above its 200 dma. “Mean reversion” beckons but this is not a near term timing call in itself.

Here some excellent sector chart work by the guys at Yardeni.


A good question that immediately strikes is how can energy sustain a par relationship to the sp500  if indeed WTI breaks down as UB suggest. WTI is a fascinating instrument right now and whilst i agree from a medium term view on wti weakness given the fundamental (and monetary if the taper talk continues) the instrument itself is starting to present another trading bounce point. US health care has consistently lead and out performed all other sectors over the last few years. Is health in a bubble? I have no idea but such a level of out performance for a psydo monopolistic sector that is so heavily regulated by government agencies in a world of interventionist policies looks ready for a powerful mean reversion some day soon.

Enjoy the above reports and lets discuss on the forum pages.

YE is within line of sight on what has been an superb 2013, thus far.


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Weekly Technical Analysis – “Dec Overshoot Target S&P500 1850 …

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