US stock markets- a short breather or a long pause?

US stock markets have been rather volatile of late. You can see that DJIA hae just broken below its intermediate uptrend line while S&P500 is resting on its intermediate uptrend line. Unless a strong rebound kicks in, US stock markets look set to consolidate for the next few weeks.


Chart 1: DJIA's daily chart as at June 5, 2013 (Source: Stockcharts)


Chart 2: S&P500's daily chart as at June 5, 2013 (Source: Stockcharts)

Meanwhile, Nikkei broke its intermediate uptrend line at 13500 three days ago. If the US stock markets cannot stage a strong rebound soon, I expect global equity markets to take a breather for the next few weeks. The same scenario will pan out in our local market.


Chart 3: Nikkei's daily chart as at June 5, 2013 (Source: Stockcharts)

Based on the above, we should avoid taking large long position in the market for the short term.