Last week, I said it was time to start looking long.  The actual turn date, which was identified in December, was January 15th, which marked the exact low. Since last week’s article for TraderPlanet (click here), the SPX has rallied some 60 points. Not bad for a quick trade.

But now, is it time to start shorting? The answer to that question all depends on your time frame. If you are a quick in and out trader, yes, you can try the short side. But it is dangerous! The sentiment cycle is still bullish and will stay that way heading into our February turn date.

A trader can try shorting, because the SPX has reached our target zone mentioned in our January 15th report. “Building a long side position with any weakness is the trade set up to watch for. 2052-2071 would make sense for upside targets heading into the February turn date. There are bullish divergences and that is yet another clue-the downside may be running out of steam here.”

Since the SPX made a high at 2064, which was right in between our upside targets, Price is in line for shorting. The technicals are quite overbought when looking at a 60- minute chart, so that lines up for trying a short trade. But the sentiment cycle or “Time” is not in line, so it doesn’t qualify for a swing trade. That will happen once we approach the February turn date.

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The safest trade set up right now is buying dips. I would watch the 2045-2017 area, if weakness picks up momentum. I am not sure it will get down that far, but if it does, using it as a buying opportunity should be a good trade.   

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