Just as it looked like a correction in equities might finally have arrived, the DAX and FTSE have staged a convincing rally. I have been among the most bullish of the bulls in 2013, but even I was a bit taken aback by this revival. I was poised to start shorting if the weakness of Tuesday continued. It did not, however, and my shorting conditions were never satisfied. I am now once again looking for long positions, principally in the FTSE.
This is not to say that it will necessarily be plain sailing from this point onwards. The main risk as I see it is of further choppy, erratic action, with impressive surges giving way to equally sudden and violent declines. My strategy is therefore to wait small intraday pullbacks and then to buy as the markets appear to be rallying anew.
I continue to seek shorts in both EURUSD and GBPUSD.
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