I plan to be away from the computer for a good deal of today catching up on a few things. With the market on various sell signals that I’ve recently highlighted, such as the 60 bearish rising wedge breakdowns & retests, the daily bearish MACD crossovers, etc…, I will be watching for a change of character in the market to help confirm the bearish case. For months, the market has been in a slow but steady, unrelenting uptrend. Any pullbacks have been bought up quickly and most days where a red close seemed baked in the cake, an invisible hand suddenly stepped in and ramped the market to assure a green close. For the last two weeks, we’ve seen a sideways consolidation whereby every gap down or intraday sell off was met with an equal but offsetting rip higher (obviously a lot of stop raids by the big boys).
However, I am watching to see if that recent pattern of unrelenting stick saves comes to an end. For example, for the past few months, this gap down would have almost certainly been bought up at some point in the day, either immediately or into the close. A substantial red close today would be one potential sign that the very early stages of a new downtrend has begun. However, as I always say “One day does not make a trend” so we can’t read too much into the price action on an single day. I’m just on the lookout for signs of character change in the market to either confirm my bearish bias (and continue to add to shorts on market weakness) or prepare to adjust accordingly if things play out the other way, such as a large green close today.