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Tuesday, June 10, 2014

Wondering if that's it for $SPX for a while


Here's the S&P chart as of yesterday close:


RSI is over 70, MACD is as high as it ever was, and there's a heck of a lot of white candles in a row over the past 3 weeks.

So maybe the S&P 500 is done its moving for the next few months?

Then again, R2K provides the counterfactual:


Does it have to make a new high before this bull move is done?

Well, people supposedly rotated out of R2K because they want to buy US economic growth instead of specific growth stories. So maybe no.

Then again, maybe people oversold the R2K and Q on the last rotation, and it needs to pop back more. So maybe yes.

Then again then again, a local top today, followed by a few months of chop, would mean people start freaking out again about the US market because "OMG the R2K didn't confirm the S&P breakout, therefore DOOOOOM!!!1!eleven!!" They'd even see the potential for an H&S in the R2K, and that would really freak them out - despite the utter lack of volume that'll show on the right shoulder, which will mean it's not a H&S. And that would about characterize the narrative for every single level month in the market, no?

Then again then again then again, why would the S&P stop before 2000? Law of round numbers says that shouldn't happen. It broke 1900, therefore 2000 is baked in.

Then again then again then again then again, if it did stop before 2000, maybe the press would discover the law of round numbers and start calling that another reason to fear the imminent collapse.

I dunno.

My own theory right now is the gold miners (one in particular) should do pretty well in the next few weeks, and a one-month 10%-20% profit is enough to drag me away from the S&P.

Because RSIs are too high, and thus I think this move is a bit overextended.

More importantly, I think every other clown on the market also follows RSIs.



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