Stocks continue their steady march higher, without any letup. Maybe we will see some selling this week, as we continue to be in a lunar red period. But where are the sellers supposed to come from? Investors who have been long probably see no reason to sell.
Let’s have a look at the S&P 500:
S&P has been moving sideways with an upward bias and keeps printing marginal new highs. This slowdown in momentum is being picked up by the Earl2 (orange line), which has turned down from a weak peak, painting a bearish divergence. The faster Earl (blue line) is climbing again, but could soon paint a bearish divergence as well. None of this guarantees a pullback anytime soon, but from a shorter term perspective I prefer to stand aside with this kind of setup.
If we get a dip then I would still look for support at the 2130 level. What happens at that point would give us useful clues going forward. Until then, just stay on the beach and enjoy the swim or the surf.
LunaticTrader 