Click on Chart to EnlargeThe S&P 500 pushed above 1175 today and closed above that level. The RSI became overbought today in the process. So while anything can happen, the chances are that the market uptrend is tired and will reverse significantly soon. Imprint the way the market "feels" to you right now, so that in the future you can remember the feeling associated with what happened in the market.
I like the fact that 1175 was taken out to the upside, but I would prefer things not go higher given my current positioning in the market. If the market were to top right here, that would be a fairly nice Gartley pattern. Given the position of the Euro, USD, and gold, I think the possibility is distinct of a rather large correction from these levels.
Now from a harmonic pattern perspective, a bearish Gartley top like this, will often lead to a major prolonged move down. So be aware of that possibility if things level off and reverse from here. I personally would trim down investment longs significantly if your time frame allows.
There still has been no candlestick reversal pattern yet on the daily or weekly chart. It would be nice to see that for some confidence that a high is being put in.
On a side note, maximum pain theory would suggest that options should expire a little below 1150 on the S&P 500 based off of today's data. So we may see a pullback into Friday on that account.
I like the fact that 1175 was taken out to the upside, but I would prefer things not go higher given my current positioning in the market. If the market were to top right here, that would be a fairly nice Gartley pattern. Given the position of the Euro, USD, and gold, I think the possibility is distinct of a rather large correction from these levels.
Now from a harmonic pattern perspective, a bearish Gartley top like this, will often lead to a major prolonged move down. So be aware of that possibility if things level off and reverse from here. I personally would trim down investment longs significantly if your time frame allows.
There still has been no candlestick reversal pattern yet on the daily or weekly chart. It would be nice to see that for some confidence that a high is being put in.
On a side note, maximum pain theory would suggest that options should expire a little below 1150 on the S&P 500 based off of today's data. So we may see a pullback into Friday on that account.
Click on Chart to EnlargeThere are a couple high profile stocks that I believe will help us to know what the market will do from here. First is AAPL. It formed a very narrow range doji after a gap up today on a wider range day in the general market. There is a strong bearish divergence on the RSI and AAPL is at a Fibonacci resistance area. A downer tomorrow could confirm a bearish reversal pattern.
Click on Chart to EnlargeOn another note, BIDU, another high flyer is not confirming the new highs over the last couple weeks. It is still stuck below. Sometimes the leading stocks give you reliable tells on the market. It looks to me like this may be one of those times.
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