Buy, hold or sell the Nikkei 225?

On 15th August 2006, we entered into Nikkei 225 long, forecasting that there will be further upside on the price potential over the next few days.
On 16th August 2006, we were indeed correct over this position taken, the Nikkei 225 surged 100.76 points or rather 0.63% from its opening level of 15,970.60 to 16,071.36. On average, we saw the warrants on this particular index rising at a modest pace of 16.18%, with NIKKEI225 DB ECW060907A topping the charts putting on approximately 31% of value.
On 17th August 2006, Nikkei was down 0.31%. However, still at a profit of around 28% of original capital invested.

To buy, hold or sell?

I would say that we hold onto our winning position as for now. Investment sentiment has been quite bullish for the past few weeks with optimism on tamed inflation and the "not so high" possibility of another Federal reserve rate hike. Having said that, we MAY see some downside on the Dow and the Nasdaq as investors take profits from their gains today on 16th August. The main issue we will need to place strong emphasis on is to see whether RSI hits overbought zone of above 80. I was a little concerned over the possible doji star candlesticks formation, but it turned out not to be the case. With the remaining indicators at their highs, and that Nikkei may top our supposed seconday price channel, we may profit-take 1 or 2 days later and maybe purchase at a lower price in the weeks to come. I will still hold on to the target level of 16,500.00.

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