The stock market is extremely strong, however, I say that the market is overbought (at least temporarily). You can see on the chart below that the E-Mini S&P 500 is outside the Keltner channels representing 3x the average true range on the daily chart. To me, this is very extreme, and sentiment may be too euphoric at this point.
Most markets I track for each coming week are in entering rangebound statistical conditions, with the exception of the Japanese yen, Australian dollar and corn futures. The yen, Aussie and corn have trending math elements that favor few turns and wide-reaching directional distances in price, with the Aussie making a monthly chart 50-simple moving average breakout, thus far. I’m bullish on all three. I was right that the Aussie’s subtle setup last week could make a surprise move, which it did, although the other symbol with the same conditions made a milder move.
Luckily or not, 2017 is behind us. It was a positive year for the gold market, as the yellow market gained more than 12%. However, investors are forward-looking, so let’s focus on what the coming months will bring.
Oil prices pulled back after Brent crude hit its $70 per barrel objective and Chinese crude oil imports hit a record high but was a bit shy of expectations, but still strong as global demand is surging, global supply is falling and then there is the dollar.