Continuing its theme from last week, the SharePlanner Reversal Indicator is continuing to red-flag traders about a possible reversal that could be coming the market’s ways. 

Both the Daily and the Weekly are sitting at extreme levels. On the daily in particular – you have the situation where the slightest bit of weakness in the coming days will be enough to trigger the reversal. 

Here’s the daily chart: 

On the weekly chart, I don’t suspect we’ll get the reversal this week, in fact I am near-certain of it. However, next week, that could very well happen, and once that happens you will have simultaneous downside reversals on the daily and weekly SPRI which historically have served the bears well. 

Here’s the weekly SPRI:

So what is to take from all of this?

Namely, that if you are bullish, stay bullish, but be careful how bullish you get. Don’t over expose yourself, and certainly don’t trade into margin. Keep raising stops, and take profits where the positions are overextended and you should be able to weather any future storms this market might give us.