- New Science in old markets -

Top extensions in Japan and Russia equity markets. Time to sell

There have been daily-scale top extensions in the last few days in a Japanese and also a Russian equity index that we follow:

Russ, Japan top exts

This makes us a little more nervous that we already were about the possibilities of further gains in equity markets around the world so we would now take even more profits on the long positions that we advised in the August 16th edition. We suggested taking partial profits in last week's edition so this means booking more (or all) of them.

The largest turn of the month was also due yesterday (see turn schedule on the front page) and this combination of top extensions and a turn almost always makes us recommend a short sale. If you are a shorter-term trader, so so now. The choice of instrument/index probably doesn't matter too much as all markets will drop together if there is a downdraft.

Many indices have also rallied back toward old highs, meaning that a fairly close stop-loss may be placed on short positions in those indices. Germany is one such and so is the UK, which has also rallied to the area of an old compression (circled in the second chart below), where we expect to find resistance:

Dax summ and FTSE comp

All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com