The warning sign of the braggadocious High-Five

I know I’m probably going to come across as some sort of “Nervious Nelly” but the recent action in the markets has me thinking that we’re about to hit a temporary top.

*boo* hiss <rotten tomatoes flying at me> 🍅

... I know.

But there are reasons for my madness hesitation:

(1) We’re approaching some emotional levels of enthusiasm that I like to call the “high-five high.” Where the markets look so awesome that I wanted to give myself a high-five because I’m “such a trading genius” (with a capital “J”).

(2) The SPY weekly chart has some blue sky target levels coming up soon (within range this week) and I think those will be a brick wall.

(3) The weakness in the smaller markets -- possibly because of the Fed’s hesitation to cut rates -- is showing signs that this bullish rally is mostly only a few big name stocks. There’s bearish divergence underneath this rally, so it’s a little thin.

Practically this means that I’m looking to book profits early, especially if we hit those SPY targets (which I’ve been talking about for a couple of weeks to my Premium subscribers).

Now, I’ve said in the past that I’m often early to call these market tops.

And last week I called a market top ... which obviously was too early.

This week could be too early too ... then again ... 

We’ll just have to see what happens.

Yahoo Finance

Why it matters …

From the article …

“Stocks roared on Tuesday after the release of the July CPI report, with the S&P 500 and Nasdaq both touching new records. Though the data showed inflation had ticked up, it increased by less than expected. The results boosted bets the Fed would cut interest rates at its September policy meeting, especially in light of recent warnings signs the labor market is weakening.”

‘Nuf said…

Comments: Looks like the Jolly Green Giant has been here! I’ve got to say, this is highly unusual in August, but we will take it! Be careful not to exhibit “irrational exuberance” as Dr. Greenspan would say. Letting options expire instead of rolling might be a great direction this week. Who knows…

I know I’ve been a little bearish on the short term market, but my new scan did give me a juicy stock with a good setup today that could be taken aggressively for 1% premium into this Friday or 1.29% premium into next Friday...