Dan Passarelli, CEO - Market Taker Mentoring

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The markets continue to climb. Something that we talked about in these videos for a while, expected that there could be a little bit more followthrough, but doesn't it seem like we might be getting close? I mean, what will it take in order to signal that the short term top of the market is in? Well, it doesn't just happen.

There's always catalysts, both fundamental and also technical. Now fundamentally, I said that I expected this week to be a little bit slow, a little bit more quiet and say it was really a pretty aggressive upday. Frankly, a little bit of a surprise to me. It's only 1.5% or so. It was a little bit higher than that at one point. So not a huge up surprise or anything, but it did move a little bit more than I thought it was. I figured that the market would sit pretty tight until Friday when the unemployment situation comes out. Now that said, here's a pattern that I've seen hundreds of times throughout my career, is when the market is waiting for news and it rises. Today it rose largely because of good earnings reports and good economic news. But what has often ended up happening once the news comes out on Friday is that some overzealous news ends up priced in and that's where we can get that pullback.

Now I'm not necessarily predicting it or calling that there will be a pullback on Friday, but I'm just saying that I wouldn't be surprised and it's something I want to watch. We often see this over selling this. Now another thing that we can watch here is down here, the RSI, which I've been mentioning, it's approaching one of its higher levels than we've seen. This is actually a one year charge that I'm looking at. Now back here in late November we had overbought and it was really just a small pullback until we got just a little bit past that still kind of kissing the 70 area and then we got a minor pullback.

So don't get me wrong, if we do get a pullback on Friday, that's just basically some profit taking from all the good news being priced in. I'm not necessarily looking at a crash or anything like that, looking for a little bit of a pullback. But hey, in markets like these where we get some oscillations, we get some volatility, these can be some of the best option trader markets there are. I hope that helps.