Yesterday I said wait for the signs of a top, and today we've got them. This doesn't mean the markets must go down, but it does mean weakness may lead to more weakness and strength can be more aggressively sold.
Here's why... All 4 market watch (SPY, DIA, QQQ, IWM) closed below prior day low and 3-day pivot low. They are also now negatively stacked on the pivots, and spent all day trading under their FTP.
The key levels for selling strength on Tuesday will be the FTP, the Friday low of the day, and R1. In all but the Q's, the Friday low and R1 are very close to each other so this area deserves extra attention.
Not surprisingly, the weakest fell the hardest - IWM, and the strongest fell the least - QQQ.
The biggest change in tactics now is not that it's time to scream "top", but rather we can now expect there is a better chance of a big down day, and expect that there will be more pressure on the market if it rallies for short OR Reversals.
You must still play daily set-up that unfolds. Don't assume the day will be down, and if it is down, watch for some of the key areas of support such as today's low of the day on Monday, the daily moving averages (10, 20 & 50 -Day), and the daily lows of last Thursday (11/13).
The SPY, IWM and DIA currently have a nice, but wide, 4-day consolidation pattern. Keep an eye on it.
Focus Longs
TJX
REGN
DLTR
JWN
ORLY
NEM
Focus Shorts
PEP
CP
JPM
FDX
URBN
