U.S. Equities posted the Biggest Monthly gain since 1987. Real or trap? I believe its a trap, with a real good news it brings. I know U.S. is definitely doing good in terms of its "REAL" Earnings, the problem is still in Europe, if all banks/investors are taking 50% default on Greek Bonds, why is equities rallying? they want to take a 50% loss? I really dont understand what's wrong with them, Though this may be good in the long run, the 50% default is really a GOOD and Perfect decision, a sacrifice in the short term, to recover long term. But take note, LONG term, means a lot of years from now. Banks write downs effect earnings, investment funds goes down, maybe another Lehman-European Version could happen as well.
Now, lets focus on the short term trades, DOW is really overbought, this is a weekly chart, and a weekly chart with an Overbought RSI , means??? Correction is coming.
Also, try to focus on the MACD below, even though this is the biggest monthly rally since 1987, how come MACD just moved an inch to the 0 line, where the below 0 means Bearish Market. Look at what happened also last 2007 Primary Wave B correction, MACD went back to near 0, but eventually sold off.
Short Term, the 12200 for me already means the peak for daily,weekly timeframe. I vote for selloffs to 9000-10000 level until Q1 Q2 2012.
Also, for Europe Equities, Focus on these 2 major equities (Although both stands at 10 P/E Ratio, im split between confidence level and most of the pain they carry on their back), the rally seems so good, but the possible head and shoulder pattern is ruining my bullish conscience, I am really scared if these below happens - A double dip recession for Europe. Ceveat.
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