What's Leading Stocks Higher

As most of you know one of my favorite leading indicators for the stock market is the Shanghai index. This index does a very good job at giving us some insight as to where our stock may be headed in the near future.

Last month I was bearish on the S&P based on several technical reasons. The cycles pointed lower, there was a head and shoulders pattern and seasonally "sell in May and go away" was also something for me to consider. I did however see the strength in the Shanghai index but I chose to ignore this market because I felt there was more evidence suggesting the S&P would go lower than higher. As we all know, that bearish outlook that I had was totally wrong. Part of being a good trader is knowing when you are wrong and then exiting the losing position promptly.

So where does that leave us now? Will stocks continues to move higher? Is this the beginning if the summer rally? Well in my opinion as long as the NASDAQ continues to lead this market and the Shanghai index continues to rally, I think shorting stocks will be a low probability position. I'd favor the long side for now on PULLBACKS and I think tech stocks are where we should be positioned long. AAPL is one stock I really like which is why I posted about it 2 days ago.