Market Update

World markets have rallied sharply in the last week on the back of not-so-negative economic data in the US. With such strong moves within such a short time, markets are short term overbought and are hitting important resistance.

SPY is hitting the upper range of the trend line since April. Plus, it's sitting at the psychologically important 110(1100 for S&P) level. It has failed to successfully break 110 twice in August. For aggressive swing traders, a short position can be entered on Tuesday if Friday's high isn't breached.

Small cap IWM is currently above the trend line, barely. If it doesn't fall back into the range in the next two days, that's a very positive sign.

Like SPY, emerging market EEM is also hitting the upper range of the trend line. It's been trading inside a symmetrical triangle for the past few months. As the two triangle lines converge, EEM will break out one way or the other. For prudent traders, there is no need to jump in before the direction becomes clear. You want to make only high probability trades when the trend is clear.

Lastly, the Japanese yen has been in a strong up trend(the chart is yen/usd) since May. But its speed of appreciation has slowed lately. Let's see if a change of trend is coming.