Buying Panic?

Today 04/05/21 the S&P 500 (SPX) reached an 86.3% gain from its 03/23/20 bottom. This move in a little more than one year is mind boggling and rare. Momentum and sentiment bearish divergences abound which have been documented in recent posts. 

The daily SPX chart courtesy of Trading View illustrates daily RSI and MACD bearish divergences.    

The throwover of the supposed Ending Diagonal Triangle (EDT)  trend line is in doubt but is still not at a point in which the EDT count would be considered invalid.

The combination of a one – year massive rally and bearish momentum/sentiment strongly suggests that a major top for the US stock market could be near.  Perhaps a top was made today.

Traders were recommended to short non-leveraged SPX related funds on the open of the 04/01/21 session.  The entry price was SPX 3992.78.  Today 50% of the position was stopped out on a move above SPX 4060.00 resulting in a 0.8% loss.  Continue holding short 50% with a stop loss at SPX 4090.    

Published by Mark Rivest

Independent investment advisor, trader, and writer. Articles have appeared on Technical Analysis of Stocks and Commodities , Traders.com Advantage, Futuresmag.com, and Finance Magnates.

2 thoughts on “Buying Panic?

  1. I see what you are seeing as far as divergences but I think we are headed much higher before they play out unless there is some really bad news. So far that bad news has not happened.

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    1. When US stocks made a major top in 2007 there was no bad news. In the middle of 2008 with stocks down significantly there was lots of bad news. If a major top is forming now there may not be any bad news until September or October 2021.

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