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Cash Is King As Equities Recycle

Regional equity markets absorbed news of a massive earthquake in Japan overnight, which created a move lower on the Japanese Nikkei an hour before the market close. Price action in the last trading session of the week the revealed downward pressure on Asian equity markets, which transposed itself into weak global equity futures trade ahead of the Wall Street open.

The German DAX is trading at 100-day simple moving average, around 7000, which is a pivotal technical swing point that traders will be monitoring, with a weekly chart close above or below that area setting the tone for next week’s trade. Upside resistance will now be very difficult to break at 7180, which is the 50-day simple moving average, with downside targets potentially including a move towards 6750, and maybe 6500 below that if news headlines continue to be less than stellar in regard to economic expansion.

The recent Sentiment and Momentum Indicator alert, sent to clients looking to get short the S&P 500 futures market with a break of 1301, has completed its downward cycle, with a move lower overnight to test support at 1280. That position should now be closed. Traders looking for an entry point on a new short position may be well advised to wait for the next recycle that tests 1300 resistance, which is the 50-day simple moving average, and to gauge the strength of resolve from that point. Consolidation of the recent moves lower which have tested the lower end of the four-hour chart trading range have now created an inflection point.

In general, major global equity indices maintain a week outlook in regard to potential gains over the course of March, with the path of least resistance now following short trend short momentum reads on all three major regional equity markets. Patience will be key as the next round of price action unfolds, with more than enough potential movement to come to justify moving to cash in the last trading session of this week.