KEEPIN WITH THE STRATEGY - Markets have found another good excuse to buy dips in risk assets, with the still dovish Fed Minutes (though nothing has changed), and the latest China data helping to infuse a fresh sense of confidence. Still, if we pull back a bit, nothing has really happened other than some bullish price action within a very choppy and directionless market. We haven't broken out of any ranges to this point, and with US equities tracking in overbought territory on the monthly chart, it seems any additional upside should be limited. I have been positioned short risk all year (in and out), and the strategy has been quite successful. I sold SPX into the Wednesday close (see "Joel Kruger Two" below). While this latest bounce might be disconcerting to some bears, the truth is it shouldn't be discouraging, as we haven't really gone anywhere. So I continue to take this sell risk asset rallies approach, until proven otherwise.
LET'S KEEP THIS ONE TO OURSELVES - At the moment (European open), there is a sense that US equity futures will explode, and risk correlated currencies will be in huge demand. While this is entirely possible for today, I also wouldn't be surprised to see a sharp turnaround in the other direction (the one I am looking for). It is amazing how fickle the markets can be, and just when you think there is every reason to be buying, within a heartbeat, everyone is heading for the exits. One chart I have rarely discussed in the past but that looks highly compelling to me is the NASDAQ. Take a look at the monthly NASDAQ chart and tell me that isn't a very pretty potential Head and Shoulders top formation. We are currently carving the right shoulder, with the neckline down around 3400 and the measured move objective on the break of this neckline all the way down at 3100. Ya, it's probably too good to be true, but maybe if we keep it quiet and don't tell anyone else about it, we have a chance of seeing the formation play out. Let's see.