We have a very strong overnight market today and this should lead to a strong opening. Currently at 8:10 am EST the S&P 500 Futures are trading 14.5 points higher and barring any barring any major surprises in Personal Income and Personal Expenditures, these higher Globex prices should hold.
There a few very interesting items to note about this open and all of them point to a short term top being put in place very early in the trading day.
First, notice the triangle that has formed on the 5 minute chart. The minimum target on this formation is roughly 1484.
Second, there is a strong second level Pivot Point at 1482.75.
Third, with the stronger open the Magic Numbers call for 1486.57.
Lastly, 100% of yesterdays range added to the close calls for 1485.17.
Starting to see a little pattern in there?
So now for the good stuff, what to do with all of that information.
For Day Traders I would look to fade the open right in the area of the above numbers.
For short term traders, or even those who just want to shave a little cream off the top, I would look to take some profits after this great run up we have had. Personally I am going to be selling the GM and Ford in the aggressive trading account and look to buy them back later at lower prices.
Intermediate term traders can look to use the potential forthcoming weakness as a buying opportunity.
Position option traders should look to pick up some fairly valued index put options.
Really anyway you slice it, there is opportunity here regardless of your trading style. One more note about the possible upcoming market correction. Don't let it spook you because it is bound to be fast, steep and hard.