Weekly Market Commentary: (Another) Reversal From 52-Week Highs

Last week, the number of 52-week Highs / Lows in the Nasdaq and NYSE flashed a new peak and reversed by weeks end. The peak in the NYSE New Highs / Lows was more prominent than the Nasdaq, although the last peak didn't result in a consolidation/decline. However, the chances are high that this peak will lead to a consolidation/decline, and this will remain in play until the next swing low (peak in 52-week Lows). Taking Profits should be the focus until the worst of the decline plays out.

The Percentage of Nasdaq Stocks above the 50-day MA reversed just shy of overbought territory. Technicals also turned tail before hitting the overbought mark. This increases the probability for another leg higher before a true top comes into play.  This will offer another chance to take profits should it come to fruition.

Meanwhile, the Nasdaq is not showing any obvious signs of a top. So it's left to breadth metrics to suggest a top is in place.

The Russell 2000 reversed off channel resistance in a potential short play opportunity. Stops go on a break of 1,008.

The Dow is another index at channel resistance. Stops for shorts on a break above 15,542.

Next week will be about preserving profits, and building potential short plays second.  Large and Small Caps are offering good shorting opportunities.  The Nasdaq is suggesting a top, but another throw over leg higher is not outside the realms of possibility. Be Prepared.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. You can read what others are saying about Zignals on Investimonials.com.

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