This kind of indicator reading makes me nervous. 

It is in major conflict with what we are seeing out of this market. It keeps pushing higher and higher, no matter how horrible GDP, Employment and every other report out there says it is. Of course with the Fed spoon feeding this market over the last five years, it should come to no at surprise. 

But how do we make sense of an indicator that shows major red flags for this market. Do we ignore it? 

I think you take the road of caution. 

Don’t over commit yourself, don’t go into margin, and keep those stops tight to capture the gains you might have already. If the markets confirm what we are seeing in the SPRI, then go with it, and look for the bearish setups instead. 

Here’s the SharePlanner Reversal Indicator.

SharePlanner Reversal Indicator 5-30-13 

You Might Like

  • South Korea and its impact on the US stock market.

    South Korea: The Hidden Driver of US Tech Volatility

  • Learn to trade within your means.

    Stop Trying to Hit Home Runs: Start Trading Within Your Means

  • Avoiding traps on stock breakout plays.

    How to Trade Breakouts Without Getting Trapped