I have been skeptical of this rally for a while now. I’ve taken the stance of “oh it could never keep going” and then came to realize that it doesn’t matter what I think. Go with the flow but stay skeptical.
I have a weekly chart of the Dow above with 4 areas marked:
- Here we see a very solid up-trend in prices that has lasted quite a few months. Bullish.
- I’ve drawn a trend line on the RSI and we are in overbought territory. Bearish.
- A significant dry up in volume has developed as prices move higher. Bearish.
- This is a bearish divergence in the MACD as the market keeps making new highs and the MACD fails to do the same. Bearish.
Overall, you can see that we are treading on thin ice here and could see the end of the rally soon. Now, I’m not the only one predicting this market action. I was checking out this post by The Crosshairs Trader and watched this video from CNBC:
Mr. Nenner is a bit unorganized here but I think his predictions are definitely something to pay attention to. It doesn’t take a genius to see all this coming. It does take some skill to stay disciplined and make the most of the situation.
Right now I would ride out the wave, but be cautious of the possible end of the rally.
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