The SharePlanner Reversal Indicator is getting a bit extreme. 

And when it gets this way, it can lead to a period of choppiness, or worse, a sell-off. 

At this point, I am more inclined to believe it will lead us to a period of choppiness or consolidation and not a sell-off. 

Seasonally we are in a period where the market tends to rally, and with the current market rally that is underway, and the lack of news impacting the market, I don’t expect a sudden shift in sentiment to the downside. 

Here’s the Daily SPRI:

SharePlanner Reversal Indicator Daily 11-12-14

On the weekly, what concerns me the most is that we are at a bullish extreme reading and the SPRI never stays at that level for long. Again, I think this leads to consolidation and not a sudden sell-off like what was seen during September/October of this year. 

Here’s the Weekly SPRI:

SharePlanner Reversal Indicator Weekly 11-12-14

On the whole, I am more inclined to reduce my exposure to the long side then I am to actually start adding short positions to the portfolio. Only short short the market when the market is showing you clear signs of a sell-off. Front-running a possible sell-off leads to disaster. 

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