The financial news headlines are screaming about the multi-year highs attained by the S&P 500 this morning. However, as you can see below on the intraday 5-minute SPY chart, the opening strength soon gave way to a waterfall gap-fill back down to yesterday’s close. Anecdotally, I see plenty of traders itching to jump on the short side to nail the top. However, there is not much inherently bearish about a simple gap-fill, in my view, especially when the overall trend is pushing higher.
To be sure, plenty of stocks could use a few days more consolidation. However, the indices have done plenty of mild consolidation over the past two weeks and I am not looking to fall asleep at the wheel, but instead focus on the areas of the market working well, such as the financials.
A red close today is likely to bring out bears who have been wrong for a while now. I suspect those pushing shorts here may very well be trapping themselves. Either way, I am staying patient and looking for some of the benign consolidations in many leading stocks to break higher yet again before I add to or initiate positions in them.
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Agree with the last paragraph, there’s two types of selling IMO…cashing in and shorting for direction. Myself, I cashed in and I am looking for other long opportunities, not looking to short the market.
I want to be wherever that picture is 🙂