Attempting to short this market has been proving very difficult for all but the most fleeting of trades as the mania in US equities continues unabated. There are some signs however that this market is losing some upside momentum. Not that this has tended to matter all that much these days since the bullish traders have been well rewarded for buying every single dip in the market. It takes some very sharp moves lower to dissuade a winning strategy.
This is a 4 hour chart of the emini S&P 500. Notice that the market ran up to the all time high above 1770 and failed to extend. This is leading to selling in the session as this is a short term sell signal for technically oriented traders.
Also notice that the volume has been drying up as the market makes all time highs once after another. It does seem as there are beginning to be some skeptics as to how much longer this can keep up and how much higher stocks can move.
Note also the negative divergence, another technical signal that upside momentum is waning.
I would expect that this index could see a dip down into the support zone I have marked on the chart. If the trend of buying dips continues, the bulls will show up again to feed on some more stocks as they position for yet another move into a new all time high once again. If this support level fails, we may have something a bit more serious at work here, although call me a doubter at this point.
Believe it or not, the VIX actually moved a bit higher today, for a change. A bit of nervousness or just another round of profit taking? We'll see.
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
Trader Dan's Work is NOW AVAILABLE AT WWW.TRADERDAN.NET