Today the SPX (and RUT) showed continued strength after a weak opening. The current price action is riding the 20-day Bollinger Band line up (see chart below). Usually, such proximity to the 20-day Bollinger Band does not last long without some pullback. Furthermore, the Market Forecast shows an extreme bullish level has been reached with all three lines clustered in the upper reversal zone. This warns of some impending weakness in the next few days.
I have created a triangle pattern to give myself a target of where the markets may eventually run into some serious resistance. The first area would be just above 2000 and the second area could come at the declining trend line drawn off the previous tops. These areas are currently about 1.5% to 3% higher.
Even with yesterday's bullish price action, the TRIN closed above 1. Today, however, the TRIN closed at 0.42 which also signals that little immediate upside is available. On February 22nd, the TRIN printed at 0.38 and the next day saw a 1.3% down move. I would not be surprised if tomorrow's action is similar.
Just for reference the RUT outperformed today with a 1% gain. This pushed the price even closer to its 20-day Bollinger Band than on the SPX. The Market Forecast also shows a bearish cluster in the upper reversal zone. The NDX and DIA (Dow Jones Industrials ETF) also finished with bearish clusters on the Market Forecast, but the QQQs just missed one.
I expect a small pullback before the markets attempt a run into the 2000 area.
