First, black candle alert on the Q’s. Those babies have been running hard the last few days so it shouldn’t surprise anyone if the Q’s pull back a little from here. You can see for yourself on the chart that those black candles on the Q’s have been pretty good at marking turning points.
But wait! There’s more.
$NYAD, the daily, pushed above 1800 today, which is showing overbought.
Zweig Breadth Thrust pushed to 61.16, when 60 is the number to watch for.
$NYMO is 6 ticks away from tagging its upper Bollinger Band and while a tag or break of that upper BB is always better, this is probably close enough given the move we’ve seen this week.
$NYSI added 75.32 ticks today. That is just a hare’s breath away from a climax signal, which would be 80 or higher, so that is probably close enough.
Well, and wouldn’t you know it, the RSI on the 60min chart of IWM pushed above 70 about 30min before the close, and those damn computers kicked in and started selling. I was thinking that maybe IWM could hold on to an overbought situation in the 60min time frame but given the readings on some of these other indicators I don’t think that’s going to be the case.
Chart courtesy of FreeStockCharts.com
The market reveals itself on pullbacks. If we do get a pullback starting in the next day or so, then a drop to the area of the 50MA at 1173 for the $SPX wouldn’t be so bad. The 20MA is just a few points lower at 1166 and even that would be tolerable. If the market is strong enough and if the rally is real, then the $SPX could bounce off either of these support levels. What I wouldn’t want to see at this stage of the game is a drop below and close below the 20MA. Something like that could mean new lows in the coming weeks.
As my neighbor said the other day, “You can never be too paranoid.”