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International Market by Martin Pring’s InterMarket Review (May 2013)

The primary trend for equities remains positive and the consensus of our long-term indicators remain in a bullish mode. However, the intermediate technical structure is overstretched and likely to trigger some kind of a decline. The nature of any correction will be important, for if it shouldget out of hand, many of the currently positive primary trend indicators could easily be pushed into a bearish mode. On the other hand, a contained correction would enable these indicators to remain bullish, thereby setting the scene for additional upside potential. Long-term indicators in the bullish camp include our Stock Barometer, which remains at a 100% reading.

Also, the number of industry groups with positive momentum in the center panel of Chart 11 is in a rising trend. The solid arrows show that such action is usually followed by higher prices, so as long as this indicator can continue to rally, it will be a positive factor. Note that the KST is also in a gently rising trend; not strong enough to be overly confident but positive nonetheless.

Finally, almost every bull market peak since 1900 has been preceded by a trend in rising shortterm interest rates. Clearly, that is presently not the case and that also should be regarded as a bullish factor. Rising rates, of course, adversely affect the economy with a lag and here again most of the long-leading economic indicators are pointing north.

Commodity Markets

Commodities underwent some strong selling in April but our Inflation Barometer remains at a bullish 75% and is within a whisker of moving higher because the KST for the CRB Spot Raw Industrials is fractionally below its moving average. As you can see from Chart 24, the ECRI Weekly Leading Economic Indicator has a consistent habit of leading the KST, and this series is still advancing. Other indicators, such as the diffusion series monitoring a basket of commodities above their 24-month MA’s (Chart 25) and the KST for the bond market confident ratio (Chart 26) are also positive.

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