BEHOLD THE SHIFTING LANDSCAPE
There are a surprising number of potentially Earth shaking price developments occurring in the market currently. I say Earth shaking because of the manner in which all of these developments seem to be correlating with each other right at important price points. Never mind the fact that all of these instruments are fundamentally correlated throughout the macro spectrum, as well.
Here is what I am seeing:
- Dow Transports: I mentioned the Transportation Average during the weekend review. Since then it has broken through the resistance mentioned and is now consolidating above the 18 month trajectory. This is a bullish sign for the Dow Transports. A bullish Transportation Average signals a changing landscape for the markets, generally speaking. It has been sometime since the Transports actually led the market up. In the meanwhile, old leaders (think: AAPL) have lost their luster and need to be replaced. Fortuitous timing.
- Emerging Markets: For the first time in quite awhile, emerging markets are making multi-month highs while the major US averages lag behind. This is another indication that the landscape beneath the markets is shifting. Last time emerging markets were truly in the lead was 2009. Important to see if this resurgence continues.
- Aussie Dollar: Coming up on a very important resistance point. Breakout to the upside looks to be coming.
- Euro: Coming up on a very important resistance point. Breakout to the upside looks to be coming.
- Gold: I have the next few days as being an important cycle turn date. I will assume, given the way everything is lining up on a macro and technical basis, that the turn will be a low. The acceleration to the upside has the potential to be dramatic. This is especially true given the way the US Dollar is lining up for weakness.
Should all of this go the way I think, emerging markets will continue to accelerate, buoyed by a weak Dollar and continuing strength in commodities, especially precious metals. All of this fits into a bullish US equity scenario, which I have taking place into the end of 2012 and throughout 2013.
A change in the leadership roles of the market certainly looks to be taking place. Think we are seeing the beginning stages of that now.
