Chart constructed using Advanced GET End-of-Day

We advised Thursday (whether potentially early or not) to book some profits in short equity index futures. Various individual stocks could certainly slide some more, and we remain bearish the financial sector. But to linger in shorts at this juncture seems piggish to us. By now, almost everyone has heard the old adage that "bulls and bears on Wall Street can both make money, but pigs get slaughtered" -- and that thought seems to hold some validity in this circumstance.

That said, where might one shift focus? Although we remain a bit friendly to the euro within the foreign exchange world, we think the corrective retracement period in USD/JPY may be coming to an end. One solid close above the 100-day moving average and Fibonacci resistance near 118, and the recent yen chop should come to an end. We'd guess the current range between 114 and 118 could end up as a "flag" pattern marking just half of an eventual move from 107 up to an extrapolated high at 127.36.

Does this view make any fundamental sense into Japan's fiscal year-end in March? Likely not, since yen repatriation and strength has typically been the norm for this period. But since when have the markets been so sensible for macro-thinkers looking at potential capital flows to guess it right? We'll stick with the technicals here and get ready to jump back aboard the U.S. dollar against the yen on a bit more dollar strength.

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Sand Spring Advisors provides information and analysis from sources and using methods it believes reliable, but cannot accept responsibility for any trading losses that may be incurred as a result of our analysis. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, and should always trade at a position size level well within their financial condition. Principals of Sand Spring Advisors may carry positions in securities or futures discussed, but as a matter of policy will always so disclose this if it is the case, and will specifically not trade in any described security or futures for a period 5 business days prior to or subsequent to a commentary being released on a given security or futures.