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Longer term uptrend still very healthy and intact, long term trend followers have been able to let long equity positions run for over a year now.
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Short term we are still a little overbought here and it would be healthy for a retracement to the 21 day or 50 day or some base building in a price range before we have a better probability of higher prices.
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Right on cue as I have discussed before on this blog the 70 RSI on the daily chart is a concrete ceiling that stops upward momentum, while the RSI is not a great indicator for momentum stocks it works beautifully on the $SPY the vast majority of the time. The 70 RSI could not be taken and held last week and that was where the all time highs quit advancing.
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The 10 day sma was lost on both the $SPY and the $SPX on Friday this is my biggest line in the sand between whether I look to trade the long or short side. (Interestingly the 10 day ema held in both indexes for those that watch that line).
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In 2014 I have played bearish credit spreads using $SSO calls, my trades have been betting that the best odds were that $SPY would not continue up after crossing into the 70 RSI territory. In week 1 that worked. It is my best trade idea when I have no short signal and it is too extended to enter long.
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For six days $IWM has been out of steam and it generally leads the risk on/risk off trend.
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I will be looking to buy a dip reversal at the 21 day ema or the 50 day sma if it gets to either of them & bounces and holds until the end of day.
