Wednesday

Market Weakness

Post a Comment June 3, 2009 – 5:20 pm |   | Permalink |  Print This Post |

Market should show some weakness after such a powerful rally - our short term indicators suggest a down day Wednesday. Stay alert, take some profits if its there to take - India remains our main bet. Currently the Dow is down 100 points. Most technical traders have a confirmed uptrend - we dont feel comfortable going against the masses but will not be adding to our long positions. If India is anything to go by, the Dow could fire up to hit 10,000 to close up the discrepancy between markets. India failed to make a higher high Wednesday - 4571 was the high of the day. 4600 remains the resistance level - if you do not have a position, shorting here would be very safe if done moderately. June is traditionally a month of weakness - either way we are happy. The higher it goes up, the greater the fall. Headlines are starting to turn bullish - Australia’s latest economic indicators show “Australia not to be in a recession” and Australia 200 broke through the 4000 mark - which will act as a temporary resistance. It remains the weakest index, followed by FTSE. We will look to go long Australia on significant weakness (<3900), especially if India remains at such (ridiculous) levels. For now, we are hip deep in FTSE/DAX discrepancy trade - there could be further widening of the gap between the two especially if markets decide to rally on. A pull back would be in our favour - though we are not counting on that just yet. This marathon has no finish line in sight and an unknown distance to go, so pacing yourself and factoring the “impossible” is crucial to ones survival.

We will only be shorting Dow with the same level of vigour as India once/if it hits 10,000. At those levels, most bears would be trembling and digging deep. When we start asking ourselves “Are we really in a recession?” - remind us to pile in the shorts!