Regardless how you feel about it, or what is your perception, a bull goes until it can not go any further. This bull has been very strong, but on the other side we have to see Nasdaq was the weakest performing index in March, so it had a lower base to rally from. The bull is in a parabolic phase now, and I think it has become dangerously overbought.
Any time ADX hits a high at/above 40, that is often a sign for a possible top coming. This doesn't mean it can not rally any further, like even to 4000 handle, but last time when ADX recorded such a high level, it was followed by a 7,5 %correction. Daily Stochastic is in overbought zone too, the only missing part this time is the MACD.
I don't talk about Ichimoku setup now, since that is clearly bullish, but it was bullish too in June 2013 as well.
4 hrs: Obviously absolutely bullish. But again, here is the ADX Slow Stoch combo on this lower time frame too, which calls for attention.
I started to play with the idea, what it would look like if the "impossible" happens. If Nasdaq corrrects 7 % from current or from a bit higher level, that would send price back still only to the Kumo and to the shorter term bullish trend support. Does it look dangerous from birds' view? Nope. But 7 % is a lot, and what is overbought, sooner or later should show correction. If can not correct, then it will "collapse" at some point.
I don't say it is time to go short, unless you love top hunting. I just say it is really time to start thinking. Especially for Bulls! What is the upside and what is the downside risk from here? If someone is a long term trend following Bull (and let's admit, they were right so far in the long run) can still be a Bull, but meanwhile can take some profit too and wait for better entry level.
Or at least it can be wise to hedge via buying some OTM Put options.
Bears, you need to wait a bit more I think if you look for a counter trend or swing short. Wait until daily Kijun Sen comes even higher, and later, with a daily Price/Kijun cross, supported by 4 Hrs bearish Kumo reversal you can look for some short entry.
Lower supports to watch: 3855 / 3830 / 3810
Comments
Kumowizard
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By now Daily ADX reached 45,73, 4 Hrs ADX is at 69,39! DMI lines started to converge a bit on both timeframes, Slow Stochs are turning down. This index has become extremely stretched and overbought.
I started to buy 1 and 2 months put options @ 3800 strike. Bulls should not be surprised with a dip to 3840 this weak, and bears (if any left) should not be surprised if the first dip is going to be bought again. Counter trend outright short entry only valid if 4 Hrs chart gives any sell signals. Until I play only through Put options. I still like to sleep. :-)
I started to buy 1 and 2 months put options @ 3800 strike. Bulls should not be surprised with a dip to 3840 this weak, and bears (if any left) should not be surprised if the first dip is going to be bought again. Counter trend outright short entry only valid if 4 Hrs chart gives any sell signals. Until I play only through Put options. I still like to sleep. :-)