Reversal Signs Rack Up
Premium Section: TLT, XLP & NVDA Setups
As the stock market heads higher, reversal warnings are piling up. Notice that as the S&P 500 (SPY) trends higher, the McClellan Breadth Oscillator trends lower showing a bearish divergence. Breadth divergences often precede pullbacks. The RSI indicator is also in overbought territory. The Thanksgiving Rally performed like a champ, but it feels like it is starting to overstay it’s welcome. If the uptrend line breaks, expect a pullback to the following levels:
The 9 EMA around $602
The prior high around $600
The 21 EMA around $596
The Central Pivot Point around $591
The 55 EMA around $584
The S1 Pivot Point at $579
The NYSE Advance/Decline Line made a new high and hit the Upper Bollinger Band. It did what we expected and the result was a fantastic rally. Now we see it trending lower as the RSI and MACD also retreat. A normal pullback is totally acceptable, even in a bull market.
Our top Breadth Indicator is flashing a major warning. We will go over this and setups for NVDA, TLT and XLU in the Premium Section.
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