In order to determine when is the right time to start again accumulating equity with less concentration on Swing Trading, we shall look at the weekly retracement levels globally. Currently the Portfolio shows evidence that Swing Trading has been far more profitable in comparison to figuring out potential equity entry levels. Well, this won't happen once the next trend has been established. Hence, we need to be on alert for a potential turning point. The weekly retracement levels are offering a very good view of those reversal points.
We will notice on charts below that we are at important retracement levels and if we add the fact of a very high bearish sentiment in past 8 weeks combined with a record high Put Option number, we can assume that the bottom should be solved within next 2 weeks. The best would be a lower low in S&P500 with a positive divergence in weekly chart. Not much to ask for at all.
EWG - German Shares
Is an ETF for DAX and since Germany represents the strongest economy in Europe I chose this one to monitor. As we can see, the 62% retracement has been reached and most likely this was the bottom number. We might re-test it and mark a higher low but odds are very good this is a tradable intermediate bottom.
GAF - Middle East and Africa
There could be the odd chance we visit the 50% retracement being a buying level of interest for me.
Most of the Asian region depends on China and their health. Since November 2010 this market has been in steady decline. I wrote once about Emerging Markets back in December 2010 that I cannot see any possible future gains for awhile due to rising inflation. Having said this, FXI has approached now a rather attractive level and China stocks are getting attractive again except property sector. I prefer banks, insurance companies and telecom companies. Large Caps only. The next 2 weeks I will be a strong buyer in this region & sectors. EFA & EEM are worth of entering at 50% retracement level to take up a position with an intermediate view.
South America Emerging Market - GML
We can see similarities to Asian Markets and 50% retracement level will show support and certainly an area I will be interested to take up positions in either this ETF or Latin America Stocks
Northamerica / USA - SPY
Last but not least the SPY showing that we could see a 50% retracement BUT due to re-newed interest in USD the 38.2% area could have been or will be the intermediate bottom. This chart coincides with my monthly chart of a bottom forming within the range 1120-1090. Please refer to article "Objective Outlook"
The prudent investor is starting to take up nimble positions in extreme oversold stocks with low P/E and reasonable dividend yield and will add more at those important retracement levels. The view is an intermediate rally of minimum 50% of the last decline.