The action feels toppy. We have had a huge rally right up and slightly over the May highs, but now we've gotten positive earnings from AAPL and FB and now we are going back down. I am also seeling relative weakness in oil and the Nikkei. The biggest reason I am getting bearish is the steepness of this rally, the air underneath, while facing a Fed that will likely get louder about tapering in the fall and with no earnings growth. The market is boring now, but I expect an interesting August with a return of fear.
The put/call ratios got very low late last week and earlier this week. The market is now vulnerable to a pullback, although its not a screaming sell yet. I may get more bearish if I see more signs of complacency.
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3 comments:
Big red candlestick for Wednesday
Usually on a big down day, you get a surge in volume, we didn't see that on Thursday, which tells me few longs sold their holdings. Also, the internals have been deteriorating for the past month. I expect choppy trading from 1640 to 1680 for the next 2 weeks to set up a big selloff in September down to 1560.
One day late on the big red candlestick, sorry. IWM back over 105 by Wednesday.
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