Wednesday, June 29, 2011

Risk Trade is Continuing

Steeply sloping uptrend channels and rising wedges are continuing on short-term charts in the beginning of Asian session on all risky assets. Rising wedge is a bearish chart formation. Unless you have a position on, you are not to get involved on the long side when this triangular formation is running out of room and nearing its apex. That said, market can remain irrational longer than you can remain solvent. So no need to be a hero here, wait for the breakdown. Aggressive traders are still in and are trailing their stops, and before too long, the "stop hunt" will turn into something more perhaps. In the best scenario it results in a minor pullback and continuation of the uptrend. In the worst - reversal and ugly liquidation in front of a long weekend. Tomorrow is a month/quarter/half-year end. "Window dressing" is the fancy phrase which will be flying across the media outlets. This means that fund managers are trying to make themselves look genius once again at the end of quarter, as they shed the laggards and put this quarter's winners into their portfolios. Investing public knows this game all too well by now. Mr. and Mrs. Jones are still in CDs since the scare of 2008. And why is anyone still wondering what happened to trading volume?? (separate post on volume coming soon)

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