Sectors on the watch to short

I’ve been bullish stocks for the past 2 odd years. But it looks to me a bigger correction in the US stocks could be upon us. Emerging markets have been under performing this whole year and there are no signs of a reversal yet (see Watch Alibaba for clues in emerging markets). Then the German DAX is just confirming the move down is very likely (see Winter coming?). And it looks gold could be starting to catch some bid (see Rotation to gold and miners?).

We saw a few failed breakouts higher in the US indices recently. I was writing about the Dow Jones Industrial Average, looking for a continuation higher. But it failed and that failed break higher, by the way a similar one happened in S&P 500, is causing concerns for bulls and all these developments are by no means constructive for stock bulls. 

So its up to everyone to decide what you want to do. You can either stubbornly hold to your longs, you can be defensive and go into cash or you can even short some indices, sectors and even individual stocks. But which ones and under what conditions?

Read More

Dow Jones Industrial Average: stocks are going up!

So many guys are trying to call the market top in an up trending market. Sure, any swing top could be the top, but calling the one is a low probability bet for obvious reasons. Usually major tops are a process and they need time to develop. For example one could argue that German DAX is currently forming a major market top. We’ll see if that will be the case. But there is no sign of a major market top in the US stock indices yet.

And DJIA closing at a new all time highs, surpassing this January’s high, is anything but bearish. Breadth indicators are also not telling a bearish story. And what if there is a bigger risk of a melt up, rather than an imminent crash?

I wouldn’t exclude this case and neither should you. Sure, stock market is in the later stages of a bull market in my opinion, but does this mean it should crash? If it does, I won’t be stubbornly holding to my holdings. And before we see any serious deterioration it’s hard to join the doom and gloom side. When that happens I will be more than happy to short it.

Read More

Is DAX30 getting ready to rip higher?

I’ve expressed my bullish bias in the stock market with my past few posts. Please read in my last post my observations that’s so interesting to see the eagerness to be bearish and pessimistic and with calling the market top. So I think there is no need to bore you with this again and let’s go straight into the charts.

My main question today is, can DAX30 rip higher into everyone’s face in the next couple of months? Take a look at the weekly chart of DAX. Read More

Why are you so pessimistic?

There is so much pessimism in the market right now and it’s so hard to escape from it. It feels that if one is not bearish, then he must be missing something or he is just a blind bull. I know, there are problems in the world. But was there a time when everything was rosy?

Anyway, today I would like to write a post around a tweet of mine that brought quite a lot of attention. I wrote about the same topic on June the 3rd [1] and now I would like to add few thoughts to challenge you by asking what if we are in the first stage of a multi decade long bull market, similar to the ones that started in early 50s or 80s? Read More