Over the past week or two, we've enlisted a handful of reasons - both here on the blog as well as in the members area - why the markets may be putting in a top. Here is another...

S&P-500: A Market Top?

Do you notice what is going on near the top-right of the picture (this is the daily chart of the S&P-500 showing price action overlaid with the bollinger bands). Notice that the upper bollinger band has just about come back into the picture, and what has it done...?

Notice that it has actually been falling over the past few days?

Well, the markets were showing huge intraday gains early today, after investors jumped on the news of the apparently better-than-expected jobs report. As technical analysts, we don't care about jobs reports or any other kinds of economic reports. It is all about the charts.

So despite the euphoric mood early in the day today, we doubted the move when we noticed that prices had slammed into the FALLING lower band. One of the basic tenets of bollinger band theory is that falling bands provide resistance, right? Look at what has happened.

The index has already fallen over 2% from the highs just over an hour ago. Taken together with all the other bearish signs on the charts we've spoken about over the past several days, we wouldn't be surprised if this marks a market top over the short-term.

Only if the upper band starts to rise again will there be the possibility of a sustainable move to new highs. So keep an eye on the upper band and if the index moves and stays below the 20dMA (it is currently just below the 20dMA), be prepared for a new minor downtrend.