Technically, the major indices are RIGHT at resistance and we are at a very interesting juncture here. Back in July, the market rose up to this level and then moved sideways for about a week in bullish fashion. The rise up was different then, as the indices had two short pullbacks as they rose, as opposed to this straight shot up we've seen for the past week or so. Some sideways action like we saw back then would be the best possible outcome right now for this market. I don't know if we will get it, and even if it does happen, it doesn't mean we will continue to move higher (see early August), but it would help. I still see too many stocks that are very extended and wedging higher. This is not a time I feel comfortable going long and I will continue to sit tight waiting for some better entry points.
Chart from Telechart, Courtesy of Worden Brothers, Inc.
There really isn't much else to say that I didn't say this weekend or yesterday. If I see more stocks act like ISLN, NFLX, APKR, and especially CRM have the past few days, I wouldn't be hesitant to buy stocks even with the market overbought. Those stocks have moved slightly sideways and could be forming bear flags. Meanwhile, if I keep seeing more stocks like MSB, MIPS, AMZN, INFA, LULU, and FFIV, which have just kept moving higher without any rest, putting themselves in a very extended position, I will continue to wait for a pullback. Good luck Wednesday.