After a powerful rally it is becoming apparent that the US, Japan and Europe are seeing what could be a short-term top in their equity markets. Now we have focused on the Japanese, Nikkei 225 (we are Tokyo based) that has well defined resistance points and inflection points at 19,000 to 19,200 then 20,100 to 20,400 …. all of these levels have worked as both resistance and support in the past 8 months. More importantly these levels have allowed us to position ourselves with confidence. The S&P 500 has rallied from its March lows of 2,200 and is now approaching the 3,000 level, having gone out on Friday at 2,929.80.
Should we start to reduce longs in S&P 500, Nikkei 225 and other indices. Note that we, our team, have been focused on the flat position for some time. In Europe, we could see DAX start to fade as well, so locking in profit by some investors is understanding. Our concern is that there could be a bear market retracement lower in the next 30 days. More on this view in the coming days and weeek.