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US stocks still compressing, $ backing off from top extension

There have been yet more compressions in US equity indices, as shown in this Dow industrials example:

Dow compressions

As usual, this means:

  • Prices are balanced on a knife-edge and
  • A new move will start soon but the direction is unknown

We currently have an outstanding short-sale recommendation in S&P futures from the 28th January edition that was based on the break down of some compressions early in this process. Those compressions have now been superseded by these newer ones and so there is no remaining reason to hold this short. Either place a very close protective stop-loss or simply cover here.

Meanwhile, there was a pair of top extensions in the $ index at a daily-scale across the weekend 23rd/26th January. These signals marked the top of the recent $ bull run (so far at least) and are still 'in date' although the effectiveness starts to dwindle about now. Nonetheless, it is a reason to persevere with another outstanding trade - 'long £/short $' from the January 13th edition which would otherwise  'time out' here. Keep it for a while longer:

$ index and £-$