Option Investor
Update
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Into the final hour and the stubborn rally won't let go (I call it stubborn since I'm looking to short it). The choppy price action over the past few weeks looks more like topping action (distribution) than anything else, which I think is confirmed by the loss of momentum to the upside (bearish divergences). Looking at the NDX daily chart, we've got a break of the uptrend line on RSI--a warning that the uptrend is about to end. Proof at this point, from an RSI perspective, would be a break below the shelf of support shown under recent RSI pullback lows.

NDX daily chart:
[Image 1]

But as shown on the daily chart (in pink) there is clearly bullish potential for a run up to the Fib projection near 1473. I've been thinking it's not going to do that because of the topping price action, loss of momentum (bearish divergences), break of the RSI uptrend line, overbought market, etc., but clearly the sellers haven't arrived in force yet. Just more chop and whipsaw and minor new highs, sell off, chop higher, rinse and repeat. When it lets go I think it's going to do it in a hurry so be careful if you're holding long positions. Notice also that NDX has rallied up to its earlier broken uptrend line from March 9th through the April 1st low. It remains a good setup for a short play and you might still be in previous attempts since we really haven't seen appreciable new highs over the past week or so.

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