While having an underweight view on equities other asset classes are worth a look. In addition to credits, one of the more interesting to follow, in my opinion, is foreign exchange speculation.
EURUSD is currently trading below the option barrier around 1.45 after having enjoyed a revival over the past two weeks (circled), as the sentiment towards the Greek situation has improved. In my opinion, however, the peripheral EUR situation is still so vulnerable (Portugal avaiting a general election shortly isn't exactly helping) that I expect a reversal of the past few week's gain, down towards the 1.40 - 1.41 area (38.20 fibb level at 1.4144 and 100 dma at 1.4061).
The 11th of March (OSEBX close 435) I expected a correction to OSEBX, which reached an intraday low over the past few months of 409 the 15th. This was less of a correction than expected (but still down 6% within a few days). Since then the index has returned to trading in the narrow tunnel of 430 to 445, having difficulties breaching the barrier of the 76.40 fibb levels. Closing today at 436, virtually unchanged since the last update (and as such a better return for being allocated elsewhere).
The uncertainties regarding the peripherals in the eurozone, as well as increasing signals of weaker growth in the economies still support an underweight in equities. This is further supported by expectations of rate hikes which should make bonds increasingly attractive, and could reduce liquidity flowing into equities. In the current yield environment, however, the credit spreads found for higher rated debt instruments supports investments in Floating Rate Notes rather than bonds or equities.
In support of buying OSEBX we have a rising 200 daily moving average, currently at 417 (roughly 4.5 per. cent. down from today's close) which could prove a resistance level. But the risks in the economy in my opinion still provide a poor Risk/Reward.
After having topped, and turned at the 76.40 fibb-level, OSEBX (Oslo Stock Exchange Benchmark) today closed below the support levels of the 45 day moving average, and doesn't have any new clear technical support level before the 61.80-fibb and the 255 dma. Are we in for a correction of 9-10 per cent? From a technical point of view if definately looks like it.
I personally consider this index to be overbought, and with the uncertainty that surrounds the equity markets alongside what looks to be a reduced risk of inflation for the time being, at least myself have already allocated my personal portfolio out of equities into short-term money-market instruments.