Last week, I said that if 2002 is taken out on the downside for the SPX (S&P 500 Index), then the door would be open for a push to the 2085-ish area. The important support line was never broken, and we saw the SPX make it to new highs.
That doesn’t change anything as far as the direction of the next “larger point move,” which has high odds of being down. The only thing in question right now, is whether we completed the minor pullback already and are now about to make new highs before heading lower or the highs are already in, and the SPX is heading lower.
The difference between the two above options is that if we made the minor low and are heading to new highs, the next pullback will be much deeper than anticipated. If the SPX made the short term highs and is heading down now, the pullback should be shallow, maybe a test of the 2087 support.
Our Sentiment Timing Index is also looking for some type of short-term top, which fits the next move being lower as well. We are watching some specific dates that are closing in, and when looking at the technical divergences that are in place, now is not the time to chase the long side.
Everyone loves to jump on the long or short side when the majority is thinking the same. That is the exact time you want to start looking for an exit based on a possible reversal of some type.
The expected push lower may be shallow, but the surprise would come if it isn’t. The “Herd” is only looking up right now, which makes the long side very dangerous, for at least the next 5-10 days.
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