Risk of Reversal Rising: In the Red Zone

Volume reduced yesterday as the SPY struggled to hold onto recent gains. Given the fact that it hasn't yet tagged its downtrend line, which is now trading at roughly $140.80, we believe there is still a reasonably good chance that we will see higher prices this week before sellers really step up. There are no guarantees of course, but keep in mind the possibility is there.

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Outlook:

The outlook for this market hasn't changed. Ideally prices will continue slightly higher this week allowing prices to drift into the extremes of the red zone to tag the falling trend line. Last week we noted this line was at $141.50, but given the fact that it is indeed falling, we would look for prices to tag the trend at roughly $140.50-$141.00 if overzealous bulls continue to have their way for another day or two.

*Risk of opening new short positions is now decreased and should prices run up to the $140.50-$141.00, an extremely high probability short can be put on.