European markets continue to perform well while US indices remain impacted by significant volatility. It is true that the threshold of 3% on the US 10 years is close and a crossing of this important psychological level could trigger a new decline on US indices.
Yesterday we took advantage of the decline of the NDX to reduce by half our short position to 6632.56 (sell at 6774.71 -> 142.15 pts gains). Our subscribers have been notified live via chat.
The Sigma Whole Europe Index is close to a major resistance, and this could therefore induce some profit taking at current levels. Nevertheless, at this stage, the European market remains well oriented.
The fact that the Sigma Whole Europe Index has been able to break through its 50d and 200d average is a key positive element. In terms of major indices, the CAC seems to be the leader while the DAX and the Eurostoxx "drag" in the rise.
The Sigma Whole US Index is back below its 50d average and is close to its 200d average that is still rising for now. At the same time, the VIX bounced back on '15' and continues to slowly progress. The US market seems therefore at risk of a bearish acceleration. The results of heavyweight US Tech companies (FB, AMZN, AAPL) will be critical for the short-term evolution of markets. The results of GOGG last night were good, but obviously not surprising because afterhours exchanges were flat.
European indices remain well oriented, especially the CAC which remains, in our opinion, the best index at this time for long positions. Conversely, the US indices remain nervous due to rising rates (the psychological threshold of 3% is close on the US 10 years) and the 50 days average has once again been broken. The results of tech giants will be decisive for the short-term evolution of markets. We keep a bearish bias on the NDX but recent fears about AAPL's results have created a situation where the results could surprise the market positively. Indeed, the expectations on Apple have been sharply lowered after the profit warning of Taiwan Semiconductor and they will therefore be easier to achieve. So be careful if you short the NDX because volatility remains important.