Quite a few interesting things are happening in the financial and bond markets. In the last week or so, we’ve seen the financial markets run up around 10%. Starting tomorrow through next week, the US Treasury will be unloading one quarter of a Trillion dollars in debt via Bills and Notes. This morning Real Wealth Report editor Larry Edelson issued a Flash Alert to subscribers about a possible topping of the China Shanghai Composite Index.
No doubt about it: Asian markets — especially China’s — are on a tear again. The Shanghai Composite Index (SCI) finished today’s trading session at 3,651.97 and is now UP 100% since the first of the year, DOUBLING in just over six months.
But right now, all of my indicators suggest Asian stock markets are likely getting toppy here. Don’t get me wrong, Asian markets are in a long-term bull mode. But when stocks explode 100% higher in just over six months time, they get toppy — and a pullback is not only warranted, but highly probable.
Indeed, I believe China’s markets are now meeting stiff overhead resistance at current levels in the Shanghai Composite, and I want you to grab your profits off the table before others do.
Mr. Edelson is recommending his subscribers sell their Asian positions at this time, as a correction seems inevitable. This echoes recent comments from Marc Faber who said China is due for a correction, as well as comments from Jim Rogers just yesterday about staying away from China shares at current levels.
This morning, Karl Denninger of The Market Ticker points out that the money to purchase the $250 billion in US Treasuries next week will need to come from somewhere.
According to Edelson Short-term cyclical patterns for gold and the Asian markets are pointing in the downward direction, while the dollar is pointing up, more than likely getting read for an upswing after a 7 week low against the Euro.
I suspect the S&P and Dow are pointing the same way right now — down. In fact, a look at the short-term Slow Stochastic indicators for the S&P 500 suggest a correction (no specific estimates) is about to play out as shown in the chart below:
Chart provided by yahoo
Of course, the markets may continue to rally like crazy, but the short-term indicators, as well as musings from contrarian investors around the world, suggest a pull back right now.
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