Tuesday, August 10, 2010

Calling the Top in Global Equities

Top-calling is a fun exercise as long as one doesn't take it too seriously. I have been black bile bearish on equities for several months now. I think the bear market bounce is over when it comes to global equities. Let me show you a 6 month 60 minute intraday chart of the Dow Jones World Index ($DJW), which I use to track global stocks in aggregate, thru the early part of today's action (see prior post regarding $DJW):

Now, this doesn't mean that the top is in for every individual stock market index in the world - far from it. However, no global stock market will be spared in the next global equity plunge. The U.S. Dollar looks like it is trying for a trend change here, which likely means it is time for "risk off" among the suit and tie crowd in New York (6 month daily chart of the UUP ETF as a proxy to allow me to chart this morning's action):

I am only partially positioned on the short side. If we get one more pop to the upside in the S&P 500, I will be shorting the $%#@!* out of it. I think Gold will hold up fine when one looks a few months ahead, but some volatility would be expected and normal if we get into another stock market crash, which seems entirely feasible and reasonable this fall. I will be looking to buy Gold stocks hand over fist if they plunge as I am anticipating.

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