- Price is reaching Kumo, Kijun and 100WMA
- Large HA candle, and next candle will be green as well, but watch if haDelta can stay above zero during next 1-2 candle prints. Also watch if next two candles can make a higher high or not.
- 2075-2082 is a and optimal for a sell!
- HA Oscillator still red, EWO also far away from a reversal.
Risk reward is better for shorts! Hang on, and add to your shorts!
What does it mean?
It means what we see is so far the unwind of the huge relative value spread trade by a lot of HFs and other mkt players who bet for long DAX (also long Nikkei) vs Short US equities, FX hedged via EURUSD. This trade suffers second time this year. It was an ECB QE frontrun idea.
However both indexes will suffer more technical breaks I think. Basically from now it is easy to read mkt ... at least now I think so: fundamentally nothing supports long equity positions globally at all! By all measures equities are way too overpriced in general. What keeps them floating here? The addiction of easy monetary policies presented by most of global Central Banks. However look only at the three major ones: ECB did not announce more stimulus. FED will hike for sure now. BoJ is not doing more either. -> net net less drog to the mkt.
2016 will be a choppy and bearish year.
Then maybe FED will cut back or announce QE4, I don't know. Then of course I will just blindly buy SPX and short USD, but for now I am increasingly bearish for equities.
Especially considering that yesterday the Bundesbank upgraded it's growth forecast (but only for the 2017 forecast). Why so? Is it possible that the german index will only rise if the EUR goes down further?
Your long term considerations are however right, as for sure equities are overpriced.
Thanks for your explanations, I really appreciate them.
The EURO rose largely and my guess is it will not fall back to the origin.
That said its clear that the DAX has to readjust to the new situation, meaning DAX to SP correlation is lower than before (higher EURO = lower DAX).
So the DAX might wait for the next SP downleg to falter even further with it.
The new balance might change again some days later, depending on coming FED movement.
Beside that, some further unexpected turmoil in the markets are to be expected for the rest of this year.
SPX is in a major top building phase. One day I will post an ANNUAL Heikin-Ashi chart, which idea comes originally from Dan Valcu. There it is already obvious that the really long term picture is changing and that after 6 years of bull mkt the upside is extremely limited for SP500.
So far it is in a denial phase.
People believe this huge and utter bullsht about a "dovish hike". There is no such thing like dovish hike! A hike is HAWKISH! It means monetary tightenning. And in "old-School" pricing models that is defenately not good for equities in the long run! (Have you ever heard about CAPM and discount factor?)
If you traded all the ideas in last two-three days on eurusd, silver, gold, eurgbp, corn, wheat, spx, then this was the only one not working, so as a risk adjusted portfolio it shd still be ok... But I have to admit I have a lot more short risk in spx than I had long in gold and silver. Eurusd longs I closed already.