Last week, we reviewed the 2000 and 2007 previous tops. I focused on which indicators gave the best signals. More accurate, discovered which indicators Institutions used to take profits and play the downside.
Today, we study the current market action and apply what we learned from the previous tops to help with investing and trading decisions.
Q. Is the market topping?
A. To help answer, let’s study the SPX for clues.
1. SPX rally since February 2016 is 35%
2. SPX rally since last year’s November election is 19%
3. Price continues to trade well above the 14 SMA
4. CMF remains very positive
5. MACD Histogram remains positive
6. RSI is extremely overbought
7. Slow Stochastic is extremely overbought
1. A pullback to the 14 Monthly SMA is around 2251…a 8%+ pullback
2. Previous bull run was four months then profit taking hit
3. We are currently on month three…are you prepared for when the next profit-taking begins?
4. Since the SPX is trading well above the 14 Monthly SMA, is it worth the risk to enter at these levels?
Tomorrow, I wrap-up this series and focus on seasonality with the three major indexes-don’t miss it!
Enjoy your week!
David O. England
Plan your work, work your plan, and share your harvest! 1 Timothy 2:1-2
This information is for Educational purposes only. It shall in no event be construed or interpreted as an offer or recommendation to buy or sell securities of any kind.
DAVID O. ENGLAND is the founder of the Eye on the Market-Training Academy and Associate Professor Emeritus of Finance. This column is presented for educational purposes only and not intended as financial advice.
If you have a question or comment, contact David England at firstname.lastname@example.org