Sunday, April 3, 2011

Everyone's looking up - apparently the charts are looking somewhere else

The Nikkei is at major resistance in a clear counter trend bounce and looks set for a major reversal. Given the handling of the Fukushima and Tsunami crisis by the Japanese can see the attitiude they bring their financial policies. It does not inspire confidence and the Japanese people will likely be pretty close to having had enough.

Some of my systems are in the latter stages of building short positions - appropriately, just while the markets are showing unhealthy patterns and most people are looking up. The reality is that it seems many people who shorted what seemed like a logical short on the Japan and Lybia news had done so as they were gotting stopped out of a longs on significant margin and have once again been taken to the maximum pain on the new shorts. They must now handle likely being stopped out of those shorts now too. The markets are certainly continuing the patterns of confused and conflicted trading - moreover, breakout and momentum trading continues to produce failed trades trapping people in uncomfortable positions. I see, particularly in the NASDAQ and the Bank Index (among others), that a large new move is likely and not where most people are looking.

My observations last Friday stand exactly as they were state. It is time to REDUCE LONG RISK in this manipulated, extremely expensive and socialized market. The risk of a market meltdown is now much higher than most anyone expects and additionally the market is as over-priced as it ever been...with the eception of 2000. I now have nice sized short positions and look at these prices as a gift to close any open longs.
© 2009 m3, ltd. All rights reserved.