A [Risk] Bearish Alternative

I am currently leaning towards a risk-bearish view - that is likely to play out over the next few weeks.

As yet, there are no bearish signals, however the way risk markets are rallying suggests increasing caution.

This is a four-hourly chart of the German DAX, which might be completing a medium-term corrective wave.

The view is similar for the EuroSTOXX 50 - the highs since the November low have been made against sharply diverging momentum indicators.

Markets About To Turn

As expected, risk based and rallied (the next day after the last update). It is my belief that risk will rally quite a bit further, possibly into February.

Below is a four hourly chart of USD against the Swiss Franc (CHF). It appears that the structure is very heavy up here, and is setting up for substantial, multi-week weakness.

Weakness in the USD is likely to coincide with a rally in risk and related assets. Below is a chart of the EuroSTOXX 50, which I believe is about to break out of its 12 week consolidation. It is of course possible that we break to the downside, however I find that difficult to reconcile with a weak US dollar. Therefore, I expect the market to break higher.

It appears that AUD has been consolidation most of 2011. I expect quite a sharp spike higher, followed by an abrupt reversal lower in the next 10 weeks.