The U.S. stock market experienced rather big swings last week. Initially S&P500 dipped to 1815 and then rallied strongly back to the 1850 level making marginal new all-time high. But then it pulled back again. So far the VIX index does not reflect this increased volatility, but it appears the volatility is indeed picking up. And as George Soros used to say, volatility is usually increasing near the turning points, so we have to be careful.
Today, I am going to make available to you my latest Short-Term update on S&P500.
Here’s my chart from this weekend (this is the daily chart of S&P500):
As you can see from my chart, the uptrend is still intact but it is losing momentum. Notice the big multiple divergence between the prices and the daily MACD oscillator. Of course, that does not mean the market will reverse lower, but it is a warning sign. And here’s what I wrote in my update to my subscribers:
The market declined below 1823 last Monday but then quickly returned above that level and rallied to 1850 level again. But again the 1850 level turned out to be a formidable resistance and the market pulled back. Now, if our wave count is correct, we will see one more rally attempt that will likely fail just abv the 1854 Fibonacci pivot level. So, based on our analysis, we have to conclude that we are very close to an important turning point. And if we add the excessive bullishness that is present on the market, we should really be cautious here.
On the downside, below 1815 will likely indicate that a Short-Term top is already in…
So, unitl we see a breakdown below 1815, we have to respect the current strong uptrend. But at the same time we have to understand that the upside is probably highly limited for now. The sentiment is also extremely bullish which is another factor that suggests caution. It is stupid to call a top in such strong uptrend, but I simply feel that we are close to an important one.
Trade with the Trend!
Alexander
http://www.Trendrecognition.com
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