Near term Top on DJIA?

 

Time for another graph. This is a hard game. And picking tops or bottoms makes a hard game impossible. So, while I'm not in the business to pick tops and bottoms, the attached graph provides some analysis on where I think we're headed.

Several things to note:

1. Continued negative divergence indicating a move lower.
2. Down volume was higher than up volume in the past week.
3. Slow stochastics are at overbought levels. I've included vertical lines (the blue ones) corresponding to overbought levels and the DJIA - while not perfect, there's some good correlation.
4. MACD historgram showing a high bar has been placed - i.e. we'll move lower.
5. The VIX index (not shown) is, again, approaching lows. This indicates the market is getting complacent - always a sign of trouble.

All in all, I'm not too comfortable establishing long positions here. Again, we still need to see if we'll establish a new base on the DJIA, retest the previous (10700 region), or charge higher.

Overall strategy: bearish with tight stops.

Please note that my sentiment is NOT long term, but very short term i.e. days to a few weeks.

Happy trading!