European Equities, U.S. Treasuries, Japanese Equities, Yen and Stimulus

European markets look to be in the process of breaking down, bolstering our "short Europe" idea: 

London FTSE 100

Paris CAC 40

Frankfurt DAX

What hasn't broken down, at least not yet, is the Nikkei.  On April 1st we presented this chart.  Here's the updated version:

We cautioned that a Bank of Japan announcement was due Thursday, and yesterday's spike from the lower trend line was due to the BoJ news: "Bank of Japan unleashes world’s biggest burst of stimulus in $1.4-trillion shock therapy".

That's not great news for our yen long position, however we'll stick with it and adhere to the original stop level.  Reason being that it has taken an announcement of so-called stimulus of record-shattering proportion to put us back to the break-even level on the yen position despite it being levered, and with everyone saying this news will "destroy the yen" we're happy to remain positioned against popular sentiment at least a little while longer.

Here's an unusual take on the Japanese central bank action:



Here's another way to gauge when U.S. equities will drop; the U.S. 10-Year Treasury Note.   A close above 133 should coincide with a bearish move in equities:

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