….(if there’s not some sort of intraday correction as the markets rally)
This is a busy chart and I’m just going to give my 2 cents about the recent market action. With my timing signal flipping green earlier this week, it has been encouraging to see the market rally, but there’s something about the action that is making me nervous regarding the velocity of the move.
I have a much longer term chart of the SPX that you can’t see due to size restrictions, but where the NYMO closed at today typically coincides with some sort of market top. I like to use the position of the RSI and whether it’s bullish (trending between 40-80) or bearish (trending between 20-60) to gauge whether a move up is a top or a continuation move. Until we move above 60 with some force this is starting to look like a bullish move higher within a longer term bearish move.
How I’m going to play this is stay long with my remaining shares as long as my timing signal is bullish, despite any bias I have, but I trimmed half of my long contra ETF’s today because of what I just explained. If we get a big rally tomorrow that would be another warning sign in my opinion…over-exuberance as Greenspan would say.
The SPX can retrace back to 1300 and that would be a good place to add back my shares I sold today, as long as it’s a controlled decline on low volume and bounces immediately. Any lingering move around 1300 would be considered a sign of weakness.
