Tracking the equities rally top: on the trail of price and time

While I'm encouraging traders who want to play the rally top we're expecting, just be nimble. And get prepared to turn in the bull horns and dust off the bear fangs and claws for the turn. Here's a review: The SPX is floating above the 1122 number, and two times 90 points above that 950 mid-rally level now testing around 1130. And it's now 10 months off the low, after the drop that segmented into 5-2-10 months (so equal in time to the big second leg down). Meanwhile it's testing Andre Gratian's projections, and his QQQQ projection about $46.50-47, and he's shown in weekend updates. It's gotten close to the top of Tony Caldaro's 1133 pivot (1133 + 7 = 1140), thus closing in on his projections 1158-1163. And if you're keeping up with Terry Laundry's T Theory updates - as I hope swing traders do, along with these others - you know he's thinking the SPX may chop higher about another week but will top out any day now that it tags his upper envelope, currently just above 1153. (Note, all the sources I mention in this post, are in the sites list at right.)

While I'm on a review of sources we've come to respect, don't forget Raymond Merriman's recent warnings in his weekly preview comments. And ChartsEdge has issued an updated version of their Trader Confidence Index (see below). It's not squarely under the .3 level pointing to a top in a couple of trading days - but they feel it's worth pointing out, so I won't disagree on that. It's possible that it's just suggesting a wave 3 of 5 interim high. So just keep it in mind with these other clues along the trail. For that matter, the VIX has been dropping to new relative lows. I can't guarantee it'll tag the 16.91 level that's my next Fibonacci projection, but it got under 19 today so it's gotten quite close to that level.

Also below is the NYAD - NYSE advance/decline chart, showing it's still strongly advancing to new highs. But it's overbought so will be ripe for a pullback at least. Finally below is the TRIN. We want to see its 10-day moving average distinctly under 0.80. Well, maybe that isn't a prerequisite, but at least a declining TRIN is helpful in tracking the rally to a top. These are all good clues for locating the bear on this trail!

Once the turn shows up, we'll need to observe the selling volumes and pattern to start getting an idea how bad it will be. There are some who think it will start a series of waves down to retest the SPX 667 low. Others think it will be merely a substantial pullback over 5%, before the rally resumes. I can see the arguments either way. So I think it'll be a good idea to be ready for a decline that may stretch out for a month or two ... So whether the top shows up in a couple of days, or a week - Get ready to cozy up with a bear suit!

PS - something else I've picked up on Twitter grapevine: per @Contrahour, "the daily and weekly $SPX DeMark Combo and Sequential are hitting 9s or 13s indicating that a turn could be imminent; with similar NDX signal." Also, per @trentwalker23, "Monthly shows a perfected 9 as well. Time to be very careful."