Two weeks ago we called a market top and we thought we nailed it. We were looking for two more things to confirm this top last week and we still have not recieved them. First off, we wanted to see RSI turn over below 50. Well it bounced back up to 60 giving bears a lot of trouble. The trend has already broken, but until demand is out of the market it will artificially float at these levels. Also, we wanted to see MACD roll over to bearish with a cross. Mind you this, MACD is a lagging indicator for market direction. Thus far it has yet to have crossed which means the future cross may be an indicator of moves downward coming this week.
Also looking at the chart we can see the trend that was broken last week looks to be taking on a new trend downwards. A high above prior week did not happen and a new low was placed. As a result, I am looking for the following things next week:
I am looking for a new uptrend with a short life to be created. The probable angle will be identical to the previous long term trend. This trend should have an upper resistance level of the previous support and next week we should see a new weekly high as a result. I would almost like to describe it as a false sense of security for longs. However, there has been a lot of crazy moves in the market and this could have just been a small pullback on a nice run up from the lows of 666 on the SPX. Therefore take caution on picking a direction until the MACD and RSI on the weekly go bearish; or look for the CCI and trend to turn bullish.
Just my thoughts! Good luck and happy trading!
Disclosure: No Positions