By the time you read this, it may be irrelevant, but it looks like the IWM has executed a gap-fill this morning. For me, it was another eye-rolling experience: a glorious early-morning profit, chipped away quickly by the insufferable BTFD crowd. This kind of thing is bad for the soul. I'm more than a little sick of it.
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I've been hearing a lot of talk over the last two weeks about how it's bad to call tops or bottoms, and that the SPX may get to the moon before we see a meaningful reversal. That's a view certainly, but there are a couple of points to make about that view. The first is that buying low and selling high is about not blindly buying trends. When you've seen a strong uptrend and you're in overbought territory you should look for some reversal, just as you should after a strong downtrend in oversold territory.
The second is that more than anything else I am a trendline analyst, and I look for short term reversals at trendline support and resistance, and bigger reversals when trendlines break. That doesn't always deliver the goods, but it delivers them a lot of the time, and SPX is currently showing trendline weakness, on negative RSI divergence, at major long term resistance. That is an obvious level to see a reversal of whatever degree. It might not be a major top, but it may well be a minor one.