The View; Above The Bollinger Bands

The recent action is a far cry from what we saw 8-12 days ago when the market sold off a little, we are back to new highs for the most part across the board and it obviously did not pay to get outright bearish due to couple of negative days.  Tops are a process which is what we explained here, here and here and by no means I’m saying this a top, I’m just very simply dropping some knowledge on those that call tops based on the action of 1 day.

However a few things stand out from The View that makes me cautious over the next 1-5 days but could turn out to be irrelevant and possibly bullish over the next 21 days.  Here they are;

  • $IWM is now up 7 days in a row, the probabilities of consolidation and or a pullback are above average after 7 consecutive up days.  (IWM has not confirmed the break of new highs for the Dow, Spx, $COMPQ.)
  • $XLB is also up 7 days in a row and it has a decent mean reversion set up.
  • $XBI up 6 days in a row and above its upper bollinger band.
  • The  massive amount of etf’s/indices above their upper bollinger band, specifically the $DIA $SPY $XLF $XLF.  Anytime I see this amount of etf’s above their upper bollinger band I get concerned in the short term (1-5 days).  But if your time frame is longer than 21 days this type of action for the most part is bullish.  Know your time frame.


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.


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