The Price Action Is Warning Us
- Posted by JC Parets
- on February 6th, 2013
Here’s something that worries me about the Stock Market today. The swings are getting bigger, not smaller. So volatility is expanding. The S&P500, therefore, is putting in somewhat of a broadening formation. Definitely not a check mark for the bulls.
And if it was just that, then maybe it could be brushed off. But it’s where it’s happening that gives it validity. As you can see in the daily bar chart below, we’re at the upper end of this multi-month trend channel:
So I don’t want to be Mr. Uber-Bear up here. But I think it’s worth noting that stocks are definitely vulnerable. And not just because we’ve gone up so much, but because there is actually price evidence.
Take a look at a longer-term chart showing the consistency of the sell-offs when we approach this upper trendline:
All I’m saying is that it’s prudent to be extra careful. We’re no longer giving this monster uptrend the benefit of the doubt. To me it’s guilty until proven innocent. At least in the short-term.
Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.blog comments powered by Disqus
J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) and is a member of the Market Technicians Association. More
- Financials Are Breaking Key Support On a Relative Basis
- The Problem That I See With Silver
- Words of Wisdom From Jim Rogers
- Watching Micro-caps to Gauge Risk-Appetite
- Here’s Why There Is A Trade In Corn
- Fox Business: S&P500 On Multiple Timeframes
- Which is the Best S&P Sector to be Overweight?
- Materials Look Attractive on a Relative Basis
- The Head & Shoulders Top in Regional Banks
- Resistance Trendlines Are Important Too
Archive by Year