We look to be right at resistance, and given that we’ve basically moved straight up off the lows I would expect one of two things to happen at this point.
- Reverse course and begin the next leg down
- Pullback on mild volume, consolidate, and head towards the 200 ma, which should be the next hurdle for this market to overcome
I’m in cash right nowand I’m going to watch thecharacter of the pullback to determine my next course of action. Going long right here is asking a lot of the markets to continue pushing higher and that very well may happen, but the risk/reward is not in your favor and over time using this strategy will hurt you. If we are in a cyclical bull market there will be plenty of opportunities to get long and there’s no need to force a trade.
Below is a 7 yr-wkly chart for the SPX with the % of stocks above 50ma. See for yourself that we’re overbought at this time.
