The Dow version of the UK equity index compressed last Friday and is breaking upward today, so far at least as we write half-way through the afternoon. We have been wary of the possibility of rallies in equity markets for some time and our advised short positions have mostly now ‘timed-out’. This makes this solitary new signal potentially interesting and could signal an up-move beginning here that may be widespread. We will watch for a short while longer but we are inclined to cover any remaining shorts in Europe (we advised taking positions in the Southern markets especially Italy) and buying the UK here. We may recommend more markets but have no relevant signals, hence the pause:
The €/$ foreign exchange pair also compressed late last week and has broken in the direction of a weaker $/stronger €. Our recent advice to buy the € against the £ in the June 16th edition has not benefitted from this $ weakness and that trade has only a few more days of life left in it. It can be kept or abandoned now and this new trade adopted—buy the €, sell the $:
