The price action in the stock market is becoming interesting. Notice the increase in volume that is taking place on these past two down days. Yes, I know yesterday was Fed day and that is the reason for the heavy volume but today's volume was even heavier.
The MACD is showing bearish divergence similar to what we saw last June. The MACD has actually crossed today confirming a sell signal in the oscillator. Keep in mind the Shanghai index has not made a new swing high with our stock market which is another bearish indication.
The most important thing to watch for is the major trendline which began back in March of this year. Until that line is broken the trend is still up. Two down days is not enough to break this bulls back. So what's the reason for me writing this post? In my opinion the bulls back is beginning to weaken. I'd be cautious here and use tight trailing stops if you happen to be long.
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