There were more top extensions in US indices yesterday, after the late session rally on 'no tapering, yet'. S&P futures, the NYSE composite, the OEX (S&P100) and several Dow instruments provided new signals, these Dow instruments for the second time in three days. The DAX and European iShares also made top extensions, for the first time in this rally. Here are two of the new US signals and both of the Europeans:
This comes at a time when we expect turns at some point in the week – possibly even two turns. The second of the two dates is today, where the turn is concentrated in Europe. We have already advised selling short US indices and the S Europeans and this advice is not only still current.but is reinforced by these new signals.
Bonds have compressed in all this excitement and we will watch carefully for a break. More on this in the next day or so.
In the meantime the dollar has extended aganist a few of the other currencies and this indicates that you should take profits on some or all outstanding $ short positions. The longer-term picture remains quite poor but we think there may be better places to re-short the $ in the weeks to come. Here are a couple of examples of those $ extension, the second of which shows where we advised buying the £/selling the $:
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