Below chart shows 60% of stock market is above the 200 day moving average. Which is showing an overbought signal in some cases. It’s not good risk reward to load longs when entire market is this high over the 200 moving average.
Still hard to say if any follow thru although we are starting to see some liquidity (no bid) issues into the January turning point. This is setting up to be a possible correction just because so many hedge funds are in the magnificent 7 (NasDaq stocks). Once these turn down, these hedge funds may be forced to sell. At that point, it may be a buy. I am watching the January 15th week for this turning point.
Things are starting to line up with January turning point from last post.
NasDaq Chart
Click chart to expand (if needed).
- We bounced off the green weekly bullish this week
- We are still above the purple quarterly bull
- If we close below year end under purple, this could be trigger down
Dow Jones Chart
- We are above the quarterly bullish (purple)
- We bounced off the yearly bull (blue) above
- Testing the day bear (orange) on this dip, will see tommorow for follow thru
This will be tricky as we are bullish for the long term, but there is a good probability we have a panic cycle break the high and then go to the low of December or January. So far shorting this and expecting we have a higher move into January, with a possible serious pull back. Regardless shorts will be there till end of January.