Springtime tops have been a feature of the stock market action for each of the past three years. With this fact uppermost in many traders’ minds, there’s a strong feeling in the air that a repeat may occur in 2013. I do not dispute that a correction may well occur in the months ahead, particularly once we enter the seasonally weaker May-September period. However, I would caution against turning too bearish too soon. The current rally in the DAX and the FTSE has not yet reached the sort of overbought and more precisely negatively diverging overbought state that I would typically expect to see at a top.
In this environment, I continue to seek longs in the indices and EURGBP, and shorts in GBPUSD and EURUSD.
Click here for PDF version.