Thursday, January 8, 2009
Significant Multi-Month Market Top Probably in at Yesterday's High; Jan. 7, 2009
A significant market top is probably in as of yesterday's highs. The highs of yesterday should not be exceeded for quite some time, and last year's S&P low of 740 should be broken before that occurs. The market should be charging significantly lower in the coming weeks, possibly months! Notice in the above S&P daily futures chart that yesterday's reversal and today's big down day formed a classic bearish reversal candlestick formation. Also notice that the MACD is showing a bearish divergence from the latest high and is now trying to cross down. Plus, today's market breadth was very very weak, and the VIX is at levels not seen in months telling us that the right complacency and over-optimism is back in the market making it primed for another big fall.
Bottom line: I strongly feel that yesterday's cash S&P high of 943 marks a significant top that won't be broken until last year's low of 740 is broken first. I'm heavily short.