Our Signal has indicated that SPY Is overbought, hitting a level 3.2 STD above our base. This is similar to what we saw on 11/24 this time we do have some other signals that are overbought with XLF the Financial Sector in a sell signal and QQQ in an overbought signal though not a sell

Whats Next and How to trade it?

Its the same way to trade this, its bearish if we see any selling in the next 2-3 days. You can see from the chart below, if there is no selling after day 5 then chances are there won’t be a decline in price. If we were to figure best case scenario for the bears, we got a 9%-12% decline over the next 10-12 days. But on average we are looking at a 3-4% decline that puts us right at 440. That is a logical support are, a round number and not a horrible decline. To resume a bullrun back to the highs.

The Trade:

Based on the data we have the current chart the trade is simple. Short into this overbought condition, with a stop at 2-3%which is above the all time highs or a stop 4-5 days from now if we don’t decline. This depends on your risk level.

If we do get a sell off your targets are 450, 440 and below.

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