Weak prospects pt III

A new high on the broader averages has been achieved, as expected - illustrated on an hourly chart of the DAX below: Chances are quite high that a fairly long-term high in risk appetite is very close. Any strength, which I do not expect to be particularly impressive, should be used to sell longs and start establishing shorts.

Arguing against an immediate top in equities is the internal structure of US indices. While it satisfies the minimal requirements for a finished move, I would prefer to see consolidation into 1015-1020 level on SP500, followed by a push into the 1040-1055 range.

At any rate, we are talking a difference of about 2-4%, so I would shift all outlooks (long, medium and short-term) to bearish. Finally, it is possible, and in fact likely that we will see divergences between indices, such that some go on to make new highs and others stay behind.

Longer-term, I expect the down move to take us below March 2009 lows.