In The Waiting Room

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Includes: DIA, QQQ, SPY
by: Polemic Paine

I consider the current state of the market much as the time between the ignition of the fuse and the ignition of the charge.

I have declared my hand in looking at the markets to turn 'risk off' in a hurry and I am waiting for them to do so. My short positions are the lit fuse, I now just need the explosion. As with all fireworks, the time between striking the match and boom is occupied by a fizz. I am just hoping that this is not a damp squib.

Thursday saw the markets turn tail refreshingly swiftly but the recovery and lacklustre day on Monday, despite being a European holiday, defused any fear momentum. In fact there appears to be very little fear at all. But I will stay my ground until recent highs break again at which point I will consider the short play a dud and throw a bucket of wet sand over it, though I always wonder as one is never meant to return to undetonated fireworks, if there are tiny pockets of the world considered as mini Chernobyls. "Wooh up there sir, you can't go down to the bottom of the garden. Why? Because in 1934 a Mr. White attempted to set off a Catherine Wheel down there and it failed to go off."

Without a bijou dumpette in the markets soon, momentum is going to get the better of us and we are going to creep higher again as no big news does tend to bias carry creep. If we look at that greatest of carry crosses, AUDJPY, we can see that it's still looking perky despite shouting about the RBA and housing market. But there are signs that the pressure is still downwards. As I look at things this morning, copper is down again, oil is lower and China sold off. Without positive news to bolster things it is hard to see FTSE and finally the other DM stock markets not following.

Turning points are never easy to play with the most usual pain inflicted through them not turning out to be turning points. They are made even harder when one thinks they will only be corrections, as I do. So though I am in the waiting room at the bus station waiting for a bus heading South, if the one heading North comes first I'll cross the road and jump on that in a flash.