Wednesday 17 February 2010

Correction Higher In Risk: Correcting The Correction

BOTTOM LINE: Risk and related assets have likely completed one leg of the ongoing correction higher. We will now likely see softening in risk appetite, which could take the whole of this week. I do not anticipate a significant breakdown in asset prices yet.

This is a four-hourly chart of the German DAX. I believe we are about to begin correcting the correction, which will produce a messy, erratic and volatile range.

This is a four-hourly chart of the mid-caps index in the USA. Mid-caps (and tech) have been much stronger than blue-chips, which suggests that substantial weakness is unlikely in the near-term.

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