Dom today
Nasty dip
DAX 30
FTSE 100
S&P 500
The weakness on Wall Street caught me out yesterday. While I was rightly bearish on the DAX, I should have been more discerning when it came to the S&P’s rather unconvincing action. With all the indices in a very sorry state as of now, I think a near-term snapback could be in order. Whether or not it turns out to be the start of a lasting recovery remains to be seen. I do ultimately expect the current shakeout to lead to another good buying opportunity, with new highs in the S&P and FTSE to follow. I am willing to take small shorts at the end of an intraday rally, meanwhile.
Yesterday: “I’d just about short a reversal at the 21-EMA, targeting below 9141.” I should have had more conviction in my bearish view yesterday, as the DAX plunged to and through my target. It is now deeply oversold, so a snapback is likely in order. Another failure at the 21-EMA could open up a further shorting entry.
DAY: I’d short another reversal at the 21-fourhourly EMA.
POSITION: Neutral.
FTSE 100
The FTSE too has become deeply oversold on its fourhourly chart. It has now returned to its 200-day moving average, just as it did in October, December and January. Each time a rally followed, making a slightly higher high. I reckon the same will happen this time. In the meantime, a snapback to the 13-EMA could be seen.
DAY: I might short another drop through the 13-EMA, targeting 6450.
POSITION: I await a recross of the 21- and 55-EMAs in order to buy again.
S&P 500
My bullishness here was unwarranted yesterday. I should have been distrustful of the S&P’s rally, given the lack of fullbloodness that I mentioned, and my more bearish views elsewhere. With the 21-EMA having crossed below the 55-EMA, my bias has gone negative. I expect a rally first to the 21-fourhourly EMA.
DAY: Exit remaining longs, short another drop through the 13-EMA, targeting 1833.