Risk: Time to Start Building Cash (We Move to Hard Yellow

That didn't take long. The Carry Trade in Japan remains an issue. Be smart...

Dear Fellow Expat:

That didn’t take long. The S&P 500 reading is back at Yellow (And the Russell has turned Red with a 2% down day. We’ve seen this play before… The MACD on the SPY is turning… and this could be a doozy. The MFI - as I noted last week - is still coming out of overbought conditions, and the RSI is on track to hit 50 again.

Now, I want to stress that in these environments, we tend to see two things if there’s going to be a bigger decline. First, don’t be shocked if the market does get some legs into the end of the day. The blue line below is the SPY's Volume-Weighted Average Price (VWAP). We could see a low-volume rebound if it gets above that line by lunch. But this is where things get tough.