Pushing on a String

Markets did indeed peak on Monday, as expected. The quality of the subsequent decline is not impulsive. It is possible that Monday's highs will remain unchallenged, and risk will sell-off from current levels. It is equally possible that we rally once more, to challenge the recovery highs.

Looking at gold (here on an hourly chart), I expect USD to sell-off soon to set-up a base for a sustained rally (gold, non-USD FX, equities to rally). Turning points will once again likely coincide with market events, such as the Fed next week.

Tops in Equity Markets

Equity markets have likely peaked this morning. The cycle that began in the first days of October is likely over.

This is an hourly chart of the German DAX. At a minimum, I expect a correction to 6350, or about 5%.

Higher, for Longer

Risk failed to sell-off in the time I thought it would, and this suggests that there is a bit more strength to come, for a little while longer.

This is a daily chart of the Australian dollar in Japanese yen - a very good gauge of global risk appetite. The pair has been consolidating for about a month, and looks ready to move higher, in what I believe will be the final move higher. Under this scenario we top around the beginning of November.

This is a daily chart of the Australian stock index. Since the end of last month, the index has been trading in an ever tighter range, drawing out a beautiful symmetrical triangle. Triangle most often break-out in the direction of the preceding trend, so in this case it will be higher. However, triangles are also usually the penultimate formation in a sequence, suggesting that a sharp reversal will follow the breakout. Again, the picture here suggests tops around the beginning of November.