Bigworld, >> watch the market early next week to see when I add more to my short position <<
The thing to do (by the 'rules') is to wait for the RSI to get above 70 or higher, so the index is in overbought territory. Right now the RSI for the DJIA is only at 57.
Of the 3 main indices, the Nasdaq is where the best opportunity is for a scalp short. Not yet, but the RSI is 73, so near term overbought. You can see from the chart that the current spike up will need a pullback at some point, and that would be the time for a quick scalp short. But need to wait for the current spike to run out of gas. A lot of momentum right now for the Nasdaq though, so have to be very careful.
Looking closer at the Nasdaq, a few weeks ago it finally broke out of a bullish ascending triangle formation which had formed since Feb. It has run up strong and is now testing the next key resistance (Aug 2022 high). The big question is whether it blasts right through that area, or backs off first and has a pullback. If the market stays strong next week, it may just blast right through and go on up toward 14,000.
Personally I wouldn't be shorting this market at all. There's a lot of pent up buying demand that could be coming in now that the the debt ceiling is resolved and the Fed heat is coming off soon. Better to be long imo. If short then make it a quickie, in and out, but at minimum wait for a clear overbought signal in the RSI (over 70). Here are the current RSI readings -
DJIA ------- 57
S+P 500 -- 65
Nasdaq --- 73
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