Summary
· On a daily scale, the Index is trading in a wide range with 2,072 and 2,119 capping the price
· In May The Index tried to break higher and reached 2,134, this breakout was followed by very light volume and eventually ended up as a failed attempt.
· In most cased a false break in one direction is followed by an aggressive move in the other direction – so far this scenario didn't work
· On a weekly scale, divergence between price and RSI, weakening volume, low percentage of stocks trading above their 200dma (60%) and an extremely low percentage of stocks making new 52 week highs (less than 5%) all point out and highlight the fact that it might be pretty dangerous to chase the market higher.
· Also from a time perspective, the May 2015 high distance from the October 2007 high is equal to the distance between the March 2000 high and the October 2007 high. So far the mkt has held below the May 2015 high and while below it from a time cycle perspective the like hood for a move lower still exists
· The current high of 2,134 was just points away from 2,138 which is the 161.8& Fibonacci extension of the 2007-2009 move lower
Bottom line: I would be caution about chasing the mkt higher, while below 2,134-8 I like playing the short side, I have no open target and will amend the position if the trade moves my way. Short 2 unit from mkt price with a stop loss on a daily close above 2,140
Daily chart
Weekly chart
Monthly chart