The rally is over. Stock price expected to drop or stagnate for 1-2 weeks

We believe that current equities rally is ending here. Stocks weakness and rising volatility are likely to follow.

Implied volatility on several stock indices has dropped to such a level that further declines are unlikely (see bottom-extension signal below relating to the volatility of German DAX index). Expected rise in volatility is likely to negatively affect stock prices.



Top extension signals that we observe on some European and US equity indices is another reason to believe that stocks are likely to weaken next. This weakness is likely to last 1-2 weeks, given time-scale of the signals.

The rally is over. Stock price expected to drop or stagnate for 1-2 weeks

Intraday: Yen strengthening to halt now

We have detected a bottom extension signal on USD/JPY 2 hour dataset. This means that further strengthening of the Yen is unlikely in the near future (1-3 days). The currency is expected to trade sidewise or to weaken against the dollar.

Intraday: Yen strengthening to halt now

US Dollar rally ending for 1-3 weeks

There is a daily-scale top extension signal on US Dollar Index futures indicating that the current price rise is becoming unsustainable. There is a strong probability that the US currency will stop strengthening against other currencies for 1-3 weeks and either weaken or trade sidewise during this period.

ChaosMonitor™ model detects so-called 'phase transition' points, which are precursors of sharp changes in market behaviour. Because it focuses on the fundamental properties of the financial markets as a complex nonlinear system, it is uniquely able to forecast 'fat tail' events such as start and end of market trends, investment bubbles and market panics.

US Dollar rally ending for 1-3 weeks

Stock weakness, likely bond rally ahead (several weeks horizon)

World equity critical point signals on a daily time-scale indicate imminent end of current stock market rally. Stock prices are expected to weaken sharply or to trade sidewise for several weeks. There is a strong probability that a new long-term trend is about to begin for European fixed income instruments. The direction of this new trend for bonds is likely to be up (on price).

We have a number of daily time-scale top extension signals on world equity indices, from the US to China. These 'extension' critical points occur at the last stages of a rally. They indicate that further price advances are becoming unsustainable and the system is likely to sharply change its current behaviour.




Global fixed income asset class is at the inception of a new trend. At the start of year 2010 there has been a rare weekly scale compression signal on German Bunds. Such signals appear when a system arrives at a critical point of extreme instability. A new trend is likely to develop from this point. The model does not predict the direction of this new trend, but it is likely to continue in the direction of the initial price move.



In the past few months there has not been no significant advances in bond prices. Last week we saw a new daily scale compression signal on the Bund, and it is being followed by an upward move. This reinforces the view that we are likely to be at the start of a major bonds rally and we should expect a fall in European bond yields in coming months.

Stock weakness, likely bond rally ahead (several weeks horizon)

Equities rally ending here

A number of world equity indices are showing top extensions on 4 hour time-scale. This means further gains are unlikely and the prices should continue sidewise or down for several days.

Equities rally ending here

Equities have passed extreme point

Last week ChaosMonitor users saw top extension signals on a number of world equity indices. The signal indicated that the rally was becoming unsustainable. We continue to expect equity weakness or sidewise movement for the next few days.

Equities have passed extreme point

Intraday: Equities to stop rising for several hours

There are top extension signals on a number of European stock indices on 30 minutes to 1 hour timescale. Current short-term bullish trend is likely to pause or correct here.

Intraday: Equities to stop rising for several hours