Bull’s-eye! We did go up huge today as anticipated. Question is, have we seen the test of top today? I am getting a funny feeling that we have. While DOW made a new intraday high at 13340, SPX touched 1415 and reversed from there. Tomorrow will tell us if indeed we had a test of the high. Again, I want to emphasize the point that the markets are not going to roll over tomorrow and in fact a push is still possible but the energy seems to be diminishing. The upside now seems rather limited. Despite new high in DOW, NYMO did not go up much and is in that zone from where it can go up 25 handles but can come down 135 handles.
Today most of the European markets were closed. Overnight RBA reduced the rates by 50 basis points and that caused a drop of almost 100 pips in AUD. Even Euro dropped almost 50 pips. US Dollar is stronger across the board except CAD. It seems US $ has made a double bottom at 78.60 may now stage a recovery.
US treasury bonds are on a buy signal. All in all it may be time to be cautious. Some of the defensive positions in our model portfolio have been updated. We will add positions as we go along and deem fit.
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