This post was just published on ZYX Global Multi Asset Allocation Alert.
Money flows into our Japanese position EWJ are reaching a short-term extreme. Extremely positive money flow is a contrary signal. The way it works is that when money flows become extreme, not many buyers are left to push higher.
What To Do Now?
Our long-term target for EWJ is $13, however a small pullback is likely.
Now it is a matter of personal preference. Those who do not mind taking profits now with the plan of entering the position again at a better price may consider taking profits and exiting the position in the zone of $9.90 to $10.30. As of this writing, EWJ is trading at $9.94.
Large accounts may consider exiting in small tranches as EWJ goes higher, at the same time protecting the gains with a series of tight stop losses.
Small accounts may obviously exit in one shot.
Those subscribers with very long-term horizons, who would rather not trade often and do not see a need to lock in the gains, may consider continuing to hold the position until the target is reached.