Market Pulse

STR Bullets

Feb 8

Written by:
2/8/2016 4:27 PM  RssIcon

“Plain English”

US Equities: The NYSE a-d line has not made a new high in 41 weeks. In addition, the NASDAQ has broken down to a 52-week low. The equal-weighted Value Line Geometric Index has already decline by almost 28% from last April’s high and has decisively penetrated its 2009-2015 uptrend line. All of this has occurred even as the S&P (and the DJIA) is still only in the early stages of its primary {E}-wave downtrend.

Global Equities: In recent weeks, most of the attention has been on China. Indeed, the Shanghai Composite finished last week 46.5% below its 52-week high. However, this focus hides the fact that European markets may be facing potentially significant damage of their own in the months ahead.

Interest Rates: Last week US 10-year yields dipped to levels not seen in a year. As a result, they recorded a lower low on their monthly chart for the first time since January 2015. In so doing, the entire rally from the January 2015 low has been locked in as a complete pattern. Given the still-weak condition of the weekly Coppock Curve, even lower lows are indicated.

Commodities: Last week’s 2.98% rally was gold’s best weekly performance since July 2013. This allowed gold to rather decisively breakout through its post-January downtrend line, which satisfies the minimum requirements for a complete diagonal triangle. Further strength through the 1183-1205 area, along with a move by the weekly Coppock Curve through its neutral zero line, will strengthen the argument. Thus, if this “ending pattern” is complete, then we can also make the case that the entire 2011-2016 bear market is also complete.

US Dollar: The dollar index had its worst week since 2011. This weakness was enough to pierce what we consider to be the dominant 2014-2016 support trend line. Since we have been counting the post-2014 uptrend as an intermediate (C)-wave, this combination allows for the possibility that the index is in the early stages of its most important correction in many months.

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