The long and short term up trends in the market are both in place.
This market has gone parabolic on a break above the 70 RSI. This is a rare outlier event to run so far with no pullback.
This is currently a market for trend followers and momentum traders. Short signals have failed since the recent low was estabablished in October.
The risk/reward is skewed strongly against longs at these lofty levels. This is a let profits run kind of market and not a great time to initiate new longs at these overbought price levels. Much better odds on waiting for a pullback to get long if not already long here.
The gap open and then close lower on Friday is the first sign of a possible reversal. The second would be a close under the low of day on the gap day.
There are zero signs of a correction here, the bears have to battle for even a pullback with the buying pressure that is being exerted on every small dip.
The low of the day on the gap up is the 1st level of short term support.
The 5 day ema is the second level of support that lines up with the recent $206 break out resistance.
It is highly likely that selling deep out of the money puts is the highest probability trade here.
I will be back on the dip buying side next week given the right opportunity at the 5 day ema or 10 day sma.
