Divergence / Key reversals

Dow exhibited a key reversal yesterday to the upside. Further Divergence between USD/JPY and Nikkei shows high correlation to previous rally. Began buying Nikkei futures at the 9250 level, with tight stops at 9170. Went long (short term) dow futures as key reversal was completed.

What also gave me pause was the movement of the Bovespa and MSCI Taiwan Index Futures. Bovespa futures broke triangle formation to the upside indicating a further rally to at least the 65830 level. MSCI taiwan Index futures broke the 273.00 level to the upside. Rarely do these two markets give false signals. Coupled with key day reversals exhibited by Dow one has to be weary of trying to short. Keep timidly buying.

Market characteristics appear to exhibit a non trend period, with markets likely to remain within a rut before giving an indication of which direction to move in. Best strategy appears to be taking short term swings

By Andrew Shawn – Recursive Investments in Global Financial Markets

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