By: Scott Redler
…now time to look for some sell setups. The major indices staged an aggressive reversal yesterday. This is the first real indication that this market is reaching a technical top. Wednesday was the day to lighten up and yesterday was the day to deploy flexibility and short a reversal. Today will be very interesting. If the Bears have any control, they will not let the SPY take back $117.40-117.60 on a 60 minute basis.
For example of a trade I am anticipating, let’s quickly talk about JP Morgan (JPM). I will look to short the bounce at around $45.50-45.60, BUT, if the Bears have any control, it should not get above $45.60 and hold for a 60 minute basis.
Watch yesterday’s chart closely and see where certain stocks broke down from. Use those levels for sell setups. Then, if you get that good price and the market follows through to the downside, add more through yesterday’s lows. Most indices also have rising channels that will give us the next parameters to start looking for further downside. Watch the action of market leaders for clues.
Click here to see my updated charts of the SPY and FAS for some clues as to what I am watching.
