The Next Couple of Days

Terry wanted to know my thoughts on the next couple of days.

I am uneasy tonight. The 50-day moving average looms overhead @ 1316.89. The S&P 500 Index closed today @1296, a resistance level. Once we breach Wednesday's high of 1298, my Elliott Wave signal will flash caution. I am under no delusions here. We are in a corrective wave c. It is the final wave against the dominant trend down since May 1, 2011. I am more concerned with safeguarding profits than capital appreciation. Elliott Wave points to an end to the up wave at around 1310. Clearstation.com is also suggesting a top @1310. Gann suggests a top around 1313. So, I see a confluence of indicators pointing to the 1310 - 1318 zone as significant resistance.

Its funny. When I am on the side of the dominant trend, I am at peace. I tend to forget the market. When I'm on the right side of a corrective wave, I am very alert because I know that gains can be fleeting. The dominant trend remains in place.

I also am mindful that QE2 ends on June 30. Q: How will the market react come July 1?

On a 60-minute chart, I can see that the momentum is slowing down. There is the beginning of negative divergence on the MACD Histogram. The market can go higher but now is a good time to be on the lookout for triple negative divergence. Triple negative divergence between price action and an underlying indicator can provide an excellent sell signal. It has worked for me in the past.

The world economy is slowing. The debt problems in Europe are not going away.

An idealized chart of the Russell 2000 shows a sharp peak into July 1 followed by a decline into August.

Conclusion.

For all of these reasons, I am not dancing the jig this evening. I am watching my indicators. I remain on the lookout for signs that the market momentum is slowing. I feel that the time to sell is close at hand.

Your anxious newsletter writer,

Wink

Inspirational Quote of the Day: "If, at the time my million dollar tools are giving buy indications, most advisory services are going against my indications, your chances for a good trade are further increased! I mean this sincerely. As with the stock market, when too people believe something will happen, it never does." Larry R. Williams, How I Made One Million Dollars Last Year Trading Commodities, page 60.

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