The Price Action Is Warning Us

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:

2-6-13 SPX daily

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:

2-6-13 SPX


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
All Star Charts Blog
Paste your AdWords Remarketing code here