More sectors in reversal

 

More sectors have staged technical reversal recently.

 

The international maritime shipping sector has staged island reversal.  The actual reversal has happened a couple of weeks ago – this is a belated report as the sector wasn’t on our watch list.

 

The US treasuries & government bond has staged bearish reversal. This is very significant for two reasons: (1) the interest rate has bottomed, it’s only trajectory going forward is to go up, perhaps eventually heading toward inflationary territory; (2) huge amount of money will flow out from US government bonds, possibly creating bullish reversals in other sectors.

 

Note that there are at least two ETF’s available as vehicles for shorting US bond: PST and TBT.  These two has staged bullish island reversal.

 

The money outflow will perhaps flow into sectors we recently called reversed:

-          Chinese stocks: Shanghai A shares has staged island reversal. Oversea Chinese shares (FXI) and other Pan-China markets (Hong Kong, Taiwan, Singapore, Korea) are on our watch list for possible reversal signals;

-          Gold: could lead precious metals upward.

-          Euro: possibly other foreign currencies as well. Basically the USD is going down to the nether world as the Fed’s printing press is running at full speed.

 

The money may also flow into other sectors. We are watching the energy-related commodities (Crude, Gas) and food-related commodities as these sectors may be in the midst of some sort of bottom building activities.

 

Other commodities and even the real estate sector could attract money but these sectors will continue to be pressured by the economy which has clearly not bottomed.

 

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