The Dow Industrials have broken to new highs this morning. However, out of every major index (S&P 500, Russell 2000, Dow Transports, Nasdaq) it is the only one making new highs. While these types of non-confirmations are not magic and the other indexes could catch up, it usually pays to watch whether various indexes are confirming breakouts or breakdowns both on daily and intraday time frames.
The short-term model for the S&P 500 is now solidly in overbought territory. On that note an inverse trade could be taken right now with stops corresponding to the Oct highs in the indexes. However, so far today, the market has been an ideal trend day, and these tend to close near their highs. So unless there is some breakdown of the strength today, I will probably not post a new trade, at least until right near the close.
From a qualitative perspective, I think this move up is likely to complete a complex upward pattern in the S&P and Dow since March (I view this as the 7th wave/leg). But it will take a downward move to retrace this move up in less time than it took to form to confirm that. Short-term technicals are overbought but without divergences, so right now, a little bit of patience should be in order. And then it will be a decision on whether to anticipate a reversal and just get in on this strength or to wait for some type of price confirmation to the downside.
So, anyone planning on participating in the next trade, you may want to check for a post before market close at some point, but I'm not positive there will be a trade today.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment