If the market surges for a higher high this divergence will be continued for a more clear short opportunity and more extreme divergence.
In my opinion, Price is completely topped at 263 SPY . That was major support and hence it has become major resistance.
This bounce move could be over or it could only be 50% over. What really matters in what direction will price go after the bounce.. IMO .. DOWN DOWN DOWN.
Any shorts in this area above the 200 MA is gravy & will be profitable trades.
Yes, the perfect short should be up in the 260 areas, but there is NO guarantee that price will get to obvious resistance.
The short-term managed risk trades: I will be de-risking in the 244 area. closing more shorts and waiting to see if we break our uptrend support line. If we get below the 244 zone I will be putting on more shorts. The final Trade will be a break of the 234 support, once that is broken it will be a very violent drop . IF this support breaks then Please Please Please, do not be in the market looking for upside movement. It will be the last point for you to get out and secure your 401ks etc...
I hate waves.. But in this case.. Waves sure makes a case and we could be at the end of the correction already.
Summary: all down from here. Or, one more impulse up followed by much more long-term downside. GL traders, friends, family....
lets see if this H&S plays out.