ajtj99's Market Pulse

[Justa Werkenstiff]

Market: I remain short term neutral using the SPX as a proxy. We reached my SPY target of 127.58 by tagging 127.59 and reversing yesterday.

Short term, my view on the Naz is that a top is most likely near. Many averages are overbought on the daily but none more so that the Naz. The Naz had a closing overbought sell and candle pattern there suggests decreasing momentum to the upside. A doji or topping sequence would complete a pattern. The NDX, SOX and RUT are lagging a bit but they are real close. The NDX and RUT have a similar candle pattern.

Let's put this together with some facts. First, the OI at January QQQQ 43 calls is outlandish at over 515k. The puts at that strike are non existent. Hello? I don't care what the target may be on the NDX as if and when we approach 43 on QQQQs on the NDX that should be it. Second, in 16 out of the last 19 years (84% of time), the NDX has made a good top within 8 trading days of the start of the new year. Today is day 4. The average decline from such a top is 9% with 5% being a minimum threshold.

Put it all together and longs are now playing on borrowed time in Nazland if history is to repeat as probability and suggests it will.

Intermediate term I have turned from bullish to neutral. I have reviewed many longer term indicators last night and there are some big red warning flags. There are some bullish indicators there are too and there are enough of those to make me neutral.