SPX should top here to target 1320

4 reasons it should top here: Intersection of the two resistance trend lines (one joining 2007 high to the two peaks near 1425 this year and the rising wedge) Secondly, bearish divergence in the MACD and Stochastic. Thirdly, a weekly Doji candle close last week suggests indecisiveness or exhaustion for this rally to continue. Lastly, Rising wedge with bearish divergence is a classic reversal sign. Sell ahead of 1425, target 1320

Breadth is not confirming the current S & P 500 rally

As index goes up, to be sustainable, breadth should go up too. But as SPX move higher, the NYMO and NYSI (breadth indicators) are moving lower. A negative divergence and another evidence why it looks toppish around here.

Topping process in the markets?

Just looking at some markets and they look quite similar in nature. Using weekly, looking across SPX, MXASJ, FSSTI and Aussie, they are trading at the near the top of a weekly resistance line. And last week, SPX, FSSTI and Aussie both flashed sell signals (demark). At the same time, VIX has also fallen to the bottom of a weekly support line and also have a buy signal flashed last week (demark). Expecting a pullback soon and no point chasing at here. Given the summer lull, won’t be a huge selloff yet. SPX: sell here, SL 1422 and above, TP 1360