vlad.adrian
Short

S&P 500 - Market Top

CME_MINI:ES1!   S&P 500 E-MINI FUTURES
168 1 7
Is this the market top? Until we see this chart at 1500, we can't know for sure, and by that time it will be too late. It certainly looks like a top, and here is why.

A further bearish divergence on the MACD lines. If you consider only the major highs of the MACD lines, this would be the second divergence. However, if you consider all the peaks, including the smaller ones, this would be the third. After all, it doesn't really matter if it's the first or the fifth, it is there, and it is bearish .

Although the rally was very impressive, the Force Index has not made a new high. Note that the FI             is already oversold and this is not good in terms of finding a good risk reward trade.

Then we come to the volume bars. In mid October, a massive hammer with impressive volume was drawn just below the Wave. That is where I bought the Nasdaq. The next week, the impulse turned green.
Right now, we can see again an impressive volume bar, this time at an all time high, which shows the ease of downward movement.
Besides this, we have a bearish Marubozu candlestick , which in combination with the volume bar is really bearish .

Another look at volume , but from a different perspective, in this case volume waves. During the September - October decline a bearish change in behavior occurred. The volume during this decline is the biggest we can spot for years! Now look at the volume wave during this impressive rally! It is much smaller, after the SP500             climbed well above 2000. This is typical behavior for a top.

Finally, we have the support at 2000 broken, which was the major level everybody was watching. This break is very bearish because of the way it happened and the forces involved (beside the arguments about the volume-candle picture, the impulse turned red immediately).

To make a summary, this chart looks very bearish , but the problem is it looked bearish before too, and all we got was a decline to the Wave. Because the Wave is so close and the Force Index is oversold, it is hard to say that we will see a 10% decline in the next couple of weeks, especially with the holiday season around the corner. However, I plan to have a short position right now and ride it till I think the correction is over.

Note that on many major stocks, there are divergences on the weekly and daily charts , so the market is in sync for a decline.

Trades here : DOW
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SP500            
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Nasdaq
Nasdaq - Heavier than SP500




18.12.2014 stopped out on all 3 trades, basically the stop was roughly the same on all trades, and that is above the high from 16.12.2014.

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