Eoin Treacy's view The Danish market has been among Europe's best performers but has become increasingly overextended relative to the 200-day moving average. It posted a key day reversal on Tuesday and followed through yesterday. If the current deterioration is sustained through Friday's close it will have formed a weekly key reversal, which would greatly increase the likelihood of a mean reversion correction towards the 200-day moving average. Novo Nordisk, at a 30% weighting, is even more overextended relative to the MA, has accelerated of late and some consolidation of recent gains also appears likely . I shorted the May KFX contract at 395.8 including spread-bet dealing costs.

I decided to short comparative high fliers such as the KFX and the Nasdaq because they have had less of a fall than some of the more crisis affected southern European markets and look likely to experience mean reversion corrections. Southern European indices continue to lead to the downside but I am reluctant to chase them since they are already quite oversold.

Stop Press: I just came back to my desk having been away for a couple of hours to see the events on Wall Street. I bought back my Nasdaq short at 1887.5 against my sale on Tuesday at 1958.6.