I said that I would cry “wolf” until the wolf showed up. He’s here.
Today’s key reversal caught many traders by surprise. I wasn’t one of them and if you’ve been reading this blog for the last month then you weren’t either. The dominoes have been lining up since January 18th and it was just a matter of time before they began to fall.
When the market tops, there are often two tops: the defacto top and the numerical top. I’m calling today the defacto top but it may not be the numerical top. The numerical top often comes in the form of a double top as froth-mouthed bulls are still operating under the belief that markets only and always go up.
Daily chart of the transportation index showing a break down of all the indicators. You may not be able to clearly see, but the 5EMA crossed down through the 10EMA today. Not only that, the 9EMA crossed down through the 20MA today, as well, so this is like a double whammy sell signal.
60min chart of $SPX showing that $SPX broke below and closed below the redrawn trend line that I’ve had on the other 60min charts I’ve put up recently. There was no Bearish X today of the 13EMA down through the 34EMA, but it’s less than one point away and should happen tomorrow.
Breadth indicators warned that they were getting stretched too far and now $NYSI, the big daddy of all breadth indicators, is rolling over. Thing is that when $NYSI changes direction, it usually isn’t for a a brief period of time but instead can move in its new direction for weeks or even months and this means downside risks for the market so you may be faced with a decision sometime in the near future.
I made my decision today and unloaded my remaining shares of UPRO.