"A Few Signs of Caution"

Seems like posts about market direction are becoming a dime a dozen lately. Amidst an environment of strong conviction by so many, I think it is important not to let your thesis overlook price.

I figured I would share a few reasons why I have become cautious on this market.


$QQQ- Start with the Nasdaq which seems to be showing signs of distribution on the daily. I will be watching how price reacts to the $64.50-$65 area which is a confluence of price support and moving average support.

$SPY- The macro trend from the 10/04 low was breached recently, which changed my point of view from an uptrend to a neutral trend. The more recent price action has illustrated a bear flag on the daily. A break below $137.50ish, more importantly 1370 on the S&P cash would be a sign of weakness for me. Both the 10 and 20 period moving averages had served as support and were broken. As price negotiates the 50 day moving average we are not seeing much of a bounce.

$AAPL charts are all over the place; however it has led this monster run the entire year. Flirting with the 50 day and looks heavy, we'll see how earnings look. However, the recent distribution is definitely a sign of caution for me.

$JJC- Lastly, king copper recently broke below its recent trading range which is another sign of caution in my opinion.

Could we rip higher this week and fool a number of people including myself, sure. However, as long as we are below the 10 and 20 period moving averages with few signs of accumulation on the S&P I will remain cautious.


"The less I cared about whether or not I was wrong, the clearer things became." --Mark Douglas