U.S. equities opened higher this morning and are setting up for a sharp pullback based on technical analysis using trends, cycles, momentum, volume, market breadth and key resistance zones.
Take a look at the charts below for a quick flash of what I think.
Barchart Market Momentum Index
This chart I look at daily. In short if its price is at 101 or higher I expect the broad market to pause or pullback within the next day. It tells me if stocks have moved too far in one direction on a daily basis and if so sellers (big money players) are likely to re-align stocks by taking profits or shorting during these times.
Stock Trading Above the 50-Day Moving Average
Here we can see that while the S&P 500 has been rising over the past six months, fewer stocks are trading above their 50-day moving average. This means a smaller group of stocks is holding the market up and it’s just a matter of time before those stocks burn out and roll over also.