Impressive rebound after Friday's huge correction.
The line chart of the S&P 500 above shows the index breaking down the bearish rising-wedge pattern last Friday. Most of the time, these charts breakdown in a quick and violent move - just as it did last Friday.
The bottom window is the short-term NYSE bullish percent index. As you can see, we've seen this short-term indicator tested the 30% oversold level only three times the past year. And the indicator has mostly remains overbought during this entire rally, confirming strong bull action. The indicator remains overbought, but is now rolling over - it means more and more stocks are showing bearish technical P&F patterns. Of course, like most indicators, it's most effective at extremes. A stronger bearish confirmation is when this indicators crosses below 70% level.
Bottom line - a smart trader would used today's rally to exit their longs. Aggressive traders should take advantage of today's rally and short into it. It could be the best trade you'll ever made.
