The SPY put in three upside sessions in a row to end last week, but as the volume panel shows, each day came with decreasing volume. While normally this would be a major concern for the Bulls, keep in mind that using a weekly view, we can see that volume actually increased (not hard to do relative to last week since it was only 3 1/2 days) too the best level since August (see below).
So now what? The Bulls appear to be in control for the time being, and we should be watching for another push up here. the best case scenario is a minor pullback or consolidation to get on board, as testing the yearly highs comes with some short term exhaustion and overboughtness (I should patent that word!).
Bottom line: I will remain in day-trade mode for the time being, but will look to get on board for a swing on the long side once a pattern sets up. Will this keep me completely safe? Of course not, there is always risk involved, that is why there is the potential for good reward.
If I am wrong, make a list of stocks that are under performing the market right now. If we decide to drop, these stocks will likely make the best short side candidates. And duh, do not use inverse ETFs. I will post some charts of the weaker stocks in the next few updates.
Have a great trading week!
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