Enjoy the Risk ON rally while it lasts

Okay I must say I am impressed by Friday's (29th of June) reaction to EU summit news, specially with the rally into the close, well done bulls!
Well done 2.5% or 1/4th of the year's peak performance in a single day! Question is : are we going to have follow through.
Looking at fundamentals we are far from being out of the woods yet. The January 1st level was well defended the volume to
the downside was not heavy enough, same is true to the upside there is no conviction, the Ease of Movement indicator
perfectly shows the underlying indecision on the low fluctuation, however the indicator is still below the midline,
read in negative territory. Additionally the downward push on the On Balance Volume is still intact.
Yes, yes I hear the defendent screaming but it is summer volume its always lighter, fair enough we might have to wait till August
to see which camp has more members . We are in this 131-136 range for the last 60 or so days with a lot of chop on the daily chart .
More chop ahead with Non Farm Payrolls, EU rate decision and more EU headlines.

The old saying goes sell high, buy low. The January 1st level 127.5ish was a good buy opportunity and I missed it because I was not among the
believers of more QE (true), and I was shakey about a Greek exit (false). Whoever was brave to play these risks got nicely rewarded with at least
8.5 points move. So all in all that was the opportunity to buy the low. I do not think it is a good idea to buy the high (intraday maybe)
can we go higher from here, sure but I see near term resistance around 137ish just a point above and I just do not see the macro environment
to facilitate taking out the annual high of 142.21 more likely to revisit the lows around 127. Quick rounded Risk Reward calculation
(142 high, 127 low, 136 current price) upside 6, downside 9. Therefore I would look to sell the extreme high, which I expect
between 137.18 (High of May 2011) and 138.19 (High of February 2012). Off course things can change if volume comes in to the upside breaking through
137, all bets are off.


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