Today's action counts as bullish in my opinion. Nothing wrong with the market consolidating a bit after a 200+ move up day. In fact, it's totally normal and healthy. Then what is the word of caution I refer to in the title of the post. Well, let's have a look at the charts dear readers.
S&P seems to be in a healthy uptrend. 1115 still remains an important level for me. Then there is the trendline support for one to keep in mind. And finally, if you are bullish, what you don't wanna see is a lower low being formed. So, lots of regions of support to consider depending on your risk tolerance and the kind of trader you are.
The Nasdaq chart is pretty similar but there are a few noticeable differences. For one, we still have to make higher highs. And let's not forget the 2325 level which I have always been saying, is going to provide a considerable challenge to the bulls.
So far, so good. So, what about that word of caution? Well, look at the MACD in both the charts dear readers. We are beginning to see negative divergence in the MACD being formed here. In a healthy uptrend, the MACD would be making higher highs along with the indices. Just not seeing that, especially in the S&P.
Personally, I didn't have much time for the markets today and just day traded $GSI for around 3.5% gain.
To sum it up, I still wont advocate getting short here. But it is important not to get complacent over here if you are bullish. Taking profits never hurt anybody. If you wanna start long positions, keep them small or keep a time limit on them where you get out of them in case they don't show the expected movement by a certain amount of time. I just don't like what the MACD is telling us.
Take care and good luck!