European Equity Markets are following the strong Asian Markets to the upside, with all indices gapping up to the highest levels in 2 month. The positive mood is supported by Chinese comments on strong domestic demand and the release of the Basel III framework. With the AAII Bullish Index at 43.9 %, a new 3 month high, we should use this overly bullish sentiment to reduce exposure and ad some shorts. For the past 8 trading days, equity markets rose with extremly low volume to the levels we are seeing today. As you can see from the charts below, there is still some room to the upside, but the risk reward favours definitely the short side this week.
Last Weeks AAII Index Readings:
Bullish: 43.9 %
Bearish: 31.6 %
Neutral: 24.5 %
