The Hang Seng is at long term resistance, attempting to break out. By my secular/solar history analysis, the kind of path shown by the arrow would be appropriate, i.e. a breakout here, a rally away from the range, then a pullback in keeping with a final bear and mild recession before a new secular bull takes off with momentum.
The German stock index and US SP500 stock index share a similar look to each other: battling to hold the breakouts made above the March 2012 highs. My leaning is that they are making bull flags above the breakout, successfully backtesting before advancing. This consolidation of several weeks post QE announcement fits the action post QE2 announcement before advancing, and it also fits with Presidential seasonality, namely a consolidation mid-October before a rally around the US elections.
Gold has paused at horizontal 1800 resistance, and has made a 23 fib retrace. It could potentially drop further to make a 38 fib retrace, but either way I believe gold will shortly resume its uptrend and break through 1800, targetting the next resistance at 1900. Supporting that, seasonality is most positive for gold Sept-Feb, gold has been building energy in an 11 month consolidation, and if pro-risk breaks out as I predict above, I expect precious metals to also.
The Euro-USD pair is at an important juncture. Either it is completing a bull flag in an ongoing uptrend and is about to break out above horizontal and down-sloping resistance, or its rally is going to end here at those key resistances and it will eventually break down beneath rising support. I favour the former, in line with pro-risk.
A broad agricultural commodities ETF is shown below. After the fierce rally of mid-2012, brought about by extreme global weather conditions, softs have pulled back to between a 38 and 50 fib retrace currently. This is in line with Gann predictions for a partial retrace before a renewed rally to new highs emerges as of now, so perhaps once at the 50 fib, I expect softs to renew their upward trend.
Supporting a rewewed advance in softs, the latest NOAA climate data for September came in as the hottest globally land/ocean for that month on record, and the latest US Department of Agriculture report revealed even tighter grains supply than previously understood.
Supporting a wider rally in pro-risk from here we have (i) US economic surprises still trending up, (ii) US ECRI leading indicators still trending up, (iii) US retail sales and consumer sentiment surprising to the upside, (iv) money supply and export data from China surprising to the upside, (v) money market spreads in Europe and the US back to benign levels, (vi) German investor sentiment rising more than expected. In short there is growing evidence of global reflation, and there is a useful chunk of data coming out this week that will either add to or subtract from that, namely, Conference Board LI data for several key countries, some key China data including GDP, and some big US earnings reports.
I believe pro-risk assets are primed to resume advancing technically, subject to supportive reflation evidence, and that recent data is supportive for reflation. I therefore maintain my pro-risk portfolio as it is.
I have updated all models this morning.