There were top extensions in one of the main mid cap indices and in a small cap index in the US yesterday:
We have been reporting that the rally in US stocks has brought prices up into a broad resistance band that stems from a weekly-scale compression and extends from 2635 to 2769 in March S&P futures – updated here:
That S&P price reached a high of 2737.75 yesterday, which means it has pushed three-quarters of the way through this resistance band. It is hard for it to go much higher.
There have also been a few sector index top signals, most recently in real estate but these two new signals are the first in any broad index. This combination of resistance from an older compression and these new top extension signals is convincing and so we now advise selling any long positions you may still have from the December 26th edition ‘aggressive buy’ recommendation.
The prospect of a decent dip in US equity prices has now become more likely and we are now inclined to sell rallies. We have sold short.
