The Early Short?

Today on CNBC I was talking about the Euro/Yen relationship. First, I have to give all the credit to Helene Meisler for pointing it out. You see, I worry anytime I have an original thought! It could be a trap my ego set up. So, the currency pair started to make this perfect head and shoulder pattern over the last few weeks, but I needed to be sure it was going to break down. The bottom line is that until you have a chart that is valid, you are on your own. On Monday, the breakout happened and today I took on a position in FXY.
I see the strong Yen as an early sign of weakness in the stock markets. But, I was reminded that it usually takes a few weeks to work into the stock markets. So, instead of using the indicator to short the indexes in general, I just went long Yen. Now, I have also started to short the retail services sector, but that is more of an observation that this group is way overextended. Will the Yen be the tell this time? We will know in about 2-4 weeks.
I still think we will retest the March lows, but it will take some serious damage to get the correction going and we probably will not see a lower low. The bank stress tests are surprising. I am not encouraged when the rooster says there are a few hens missing and needs more capital. Also, we are close to May, which is the start of the ‘dry’ season until November if you are into the Almanac stuff. The FOMC meeting is tomorrow and all I know is that it will bring volatility. A nice change from the last do nothing days.