Equity indices in Europe rally on Tuesday with gains near 2%. US index futures are positive near 2% as well after yesterday’s Holiday. The entire rise from the August lows in all major indices is not impulsive. The form of the rise is a complex one and I believe we are in a wave 4 correction as we mainly move sideways in triangle patterns.
If I had long exposure I would raise my stops to yesterday lows. We should not forget how the increased volatility can work both bearish and bullish, so despite the increased bullishness this morning I want to just note that it will not be difficult for this rally to be faded. If however there is a follow through to this bullishness, we should be heading towards the multi month break down levels like 17k for the DJIA and 2010-2040 for SPX.
My main view is that we are not done with the downside yet. I have started opening short equity positions from around current levels in US stocks like NKE, PYPL, CAT, LNKD, BA, AAPL,JPM, as I have mentioned in my twitter and stocktwits accounts (@alexanderyf in twitter – @trading2day in Stocktwits).
I have also opened a small short position in DJIA SPX DAX and IBEX and will look to add on any reversal sign. From month to month I will be posting my trades and my performance from the trades that I announce to my twitter subscribers.
I’m still however not convinced that the bull market is over and that we are at the start of a new bear market. I just believe we are making a big correction similar to the one from last October or similar to the one from 2011. For more detailed analysis and if you want to see my trades in real-time being announced you can subscribe for only 34.95$ per month.
Thank you for taking your time to read my thoughts.