The action yesterday was not bullish at all. When the US-Indices opened their regular trading session everything looked like a breakout. But as I mentioned in my last post the intraday action is critical as well. Intraday all major US-Indices sold off pretty hard. They tried to bounce in the middle of their trading session but failed and closed at their lows and even more important back in their trading range, under their breakout level. Besides that the DJIA could not take out the November highs. In the weekend post I mentioned a rising trendline in the hourly chart of the SPY. The SPY broke above this trendline yesterday but during the last two hours of trading yesterday it fell back below it.
The German DAX also made another reversal or at least another candlestick pattern where you should be cautious. I am expecting at least a retest of the 6900 level and if it holds it could certainly go up further into year-end. Nevertheless I think the DAX will retest sooner or later the breakout level around 6350 at the latest next year.
The EUROSTOXX 50 also made a candlestick pattern which looks like the one of November 30th and from there on it bounced. Moreover the index did not close significant above the key 2800 level yesterday.
I do not recommend to short here but with the highs from yesterday you have some well defined stops with a nice reward to risk ratio. I personally do not like the idea to get long up here after this nasty intraday action yesterday. If you are already long you should protect your profits.
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