Looking at the chart, we can notice that the momentum is fading: until recently, the market evolved in the upper part of the uptrend channel (above the blue line for wave 'red 1' and 'red 3'), but now the market is in the lower part of the uptrend. This tells us that the advance is coming to an end.
But the main question is: Are we close to the top or did we already reach the top?
Our core scenario is that we still need one more high in order to finish the current advance (should be less than one week from now). Thereafter, a powerful setback will occur.
The alternative scenario is that we have already reached the top and the market is in a distribution phase prior to acceleration to the downside. Looking at the wave pattern it would be possible: subwave 4 blue = triangle (clear on intraday) but subwave 5 would be very small.
But there is no negative momentum at this stage, so we consider this scenario as an alternative one.
Looking at our indicator, the Sigma Trend Index remains above the zero line, the Swing moved from '2' to '4' ('mild' positive signal)
Our short term model remains in 'buy' mode for both the SPX and the NDX:
We believe we haven't reached the top yet, but we are very close to print it.
March, April and May are often important turning points in the market: since 1993, 44% of major corrections (above 10%) started either in March, April or May.
We are ready to open new positions if/when we get a sell signal from our short term model.
Short term positions:
- no more position
Medium term positions:
- short 3 SPX at 1446.09
- Short 1 NDX at 2758.8
- short 2 CAC at 3251.07