• nasd72909

The market is once again starting to show signs of cooling, which isn’t all that surprising considering that if it stayed on its current trend you would probably see the market double or triple by year’s end, so it should come at no surprise that this market is starting to see some profit-taking going on. Since March, we have seen numerous rallies that are followed by consolidation, and then signs that a reversal was pending, only to see the market reverse course and hit new highs. That was done most recently when a definitive head and shoulders pattern was formed across the S&P, Dow, and Russell, only to see the neck-collar break and then the market reverse course and sky-rocket once again.

So we could see the same thing happen once again, but eventually this market needs to see at least a 5-7% pullback, just to keep the bulls honest. If you’re brave, you could justify a short position in an index fund after seeing the bearish volume spike over the past couple of days, but for me, I need to see more signs of weakness in order to step in front of this rally, and frankly I just haven’t seen enough to do that yet.

Here’s the NASDAQ and S&P charts…

nasd72909

sp72909

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