S&P 500: Short Term Bullish Trend Terminated

SPY was so bullish in the first eight sessions in the last two weeks. I warned to look out for a top two weeks ago. Now, the caution is gone. SPY had a successful break out. There is no major resistance above the current price level. However, in short term, the performance in the last two sessions announced the termination of the last bullish run. Most likely, SPY will pull back a little. I've put two horizontal green lines here. If SPY pulls back above or in the zone of these two lines and then goes up, there will be a long rally for SPY again. If SPY pulls back below the green line around 112, be cautious of a fake break out! Happy trading!

S&P 500: be cautious for a top

As predicted in my last blog, S&P 500 had a nice bullish run last week. Let's re-examine the current market in the following figure:
After the bullish run, the market became over-bought. Three short term bearish signs are emerging: 1. RSI is approaching a short term max. 2. The price is almost over it's 2 SD range. 3. The price is very close to the reversed head-shoulder rebound level: 115. This does not mean an immediate trend reversal and short, but this does mean to be cautious and if necessary take profit. What I can say at this point is: SET STOP now! The chance of a pullback next week is increasing. The level of pullback should be closely watched. If it's too big, a possible double head pattern can form. In case this pattern forms, it will be a very bearish sign in combination of the divergent MACD I mentioned in the last blog.