I been sitting here the past 5 days watching the action on the S&P 500 futures and can't but help feel we are approaching a top. The trading action is very choppy, abrupt and feels like it is hitting a ceiling.
Here's my reasons why I feel this way and why one should consider lightening existing long positions by 60%.
- The S&P 500 eMini contract ESU9 daily has nothing but long upper stemmed candlestick wicks suggesting hesitation on the bulls part
- The S&P 500 has jumped up over 40% since March suggesting too fast too soon
- Google has started to sell off from the $450 level
- Baidu the Chinese search engine has had a tremendous run since last Christmas 2009 and looks to have topped at $310. It is currently testing its downtrend line from November 2006.
- Apple has started to sell off from it's two year downtrend line and announced $99 iPhones which to me is a sign of mass adoption
- Too many stocks I've looked at have done some 300% of their March 2009 bottoms such as Ford, Apple, Research In Motion, Wells Fargo, Advanced Micro Devices
- Retail stocks look to have dead cat bounced including Walmart, Target, Home Depot
- Berkshire Hathaway has not rallied
If anything, I'd look for a possible spike and then June swoon sell off starting in the next few weeks downtrending over the next 3-6 months.
About Kerry Kobashi
Kerry is the founder of KerryOnWorld. He lives in Silicon Valley and has worked as an engineer and project manager. He owns Kobashi Computing a consulting company.
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