In the image above, you can see that I am using a custom Tom Demark indicator for buying and selling positions. I've circled 3 points at which the TD indicator reached a 9 Sell indicator (or an 8 in the one case). After these indicators pop up, you see the market recedes. You can see a lot of noise, so every reading has to be interpreted differently.
You can also see that I circled 3 days in blue at the end of March and beginning of April. I was very bearish at the end of March, and was surprised to see that the TD indicator didn't reach a 9 on the sell side. I especially curious as to why the price gapped up on April 1st (on lowish volume). Here's what happened April 1st:
1. The White House announced that there were “candid and constructive,” trade talks with china. U.S. Treasury Secretary Steven Mnuchin tweeted that he “concluded constructive trade talks in Beijing."
2. U.S. GDP for fourth quarter 2018 fell to an annualized rate of 2.2%from 2.6%. The consensus estimate was 2.3%.
3. Housing data was released: New-home sales increased to 667,000 in February, 4.9% higher than January.
To summarize, nothing tangible happened between the US and China, GDP hit/missed the expectation depending on how you look at it, and housing data was positive. Does this really justify the price gapping up and then surpassing the previous high? In my opinion, I don't think that news justifies the price movement. Even with this push to 2900, I have reason to believe we are near the top of this market.
The chart below shows the S&P 500 weekly chart. I've circled the two previous tops, and the 2 most current bars. In the previous 2 tops, the market pushed bullish for 4 weeks past a 9 sell signal each time. This time around, we are in week 4 past a 9 sell signal. From an objective standpoint, the indicator is telling me that the market will probably continue bullish for another 4 weeks or so and likely hit a new ATH, but from a historical standpoint, this should be the last week of bullishness, and we will see the market contract over the next few weeks. If you want to get creative, you can even kind of see a head and shoulders pattern developing. If we start nearing 2600, that pattern may become reality.
Will the market hit 2600 before ATH again? I think so. Why? The daily indicator is pointing bearish, we've seen decreases in price each time the weekly chart pushes 4 weeks bullish past 9 sell indicators, and I do not think this economy is growing at a rate that justifies the market pushing to a new ATH.