ST Trading for January the 18th

Short term

When the market goes parabolic and I do not have a position on, my first instinct is to go against the trend. It is the same today. Also, usually, after a strong move up and a long week-end, a big gap up is a good short.

With the put/call ratio deeply overbought this trade looks good. However, I think it is going to work only for the first part of today's session. The market rarely goes straight down after going straight up. Since my time frame for ST trading is a few days, I will have to let the market settle first.

Longer term, breadth indicators are still diverging from the market as they usually do in bull markets. It is anybody's guess when the market breaks down. My guess is that it will start to happen this week with increased volatility. Another push higher will probably mark the IT top.