After yesterday’s mid-session edition, stocks rose further and provoked a wide range of daily-scale top extensions, in the large cap OEX:
…in the SPY and S&P futures:
…in these broader indices, the Russell 1000 and Wilshire 5000:
…and in the two main Nasdaq indices, where prices have become very frothy due to a few famous stocks:
This constitutes a ‘full house’ where every sector of the market is represented, so is a very strong signal. It has the customary meaning of a top extension – the steepening rise in stock prices will soon pause or reverse, so you should take defensive positions. It is quite possible that there will be a further rise over the next day or so but the biggest turn of the month comes in two trading days (Monday 31st – see calendar on the front page) and so these few days are highly likely to mark an important high point. Take profits on longs or place very tight trailing stops. Get ready to sell short and start any time you want – it is probably better to wait a bit until the market shows that it is ready to turn. It is at these times that traditional technical analysis can help – look for the the classical reversal patterns in intraday charts on any of these indices.
It is also highly likely that other markets will be affected by this change of weather. We will advise further as events unfold.
All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com
