I am very short biased on the markets for next week and here's why:
If you take a look at the daily chart of the SPY's above, you will that it is now very over bought after 5 not so impressive up days in a row on relatively speaking paltry volume. In addition, this up leg looks the be the start of the right side of a smaller head and shoulders pattern very similar to the larger one that we broke down from in late July/early August. Many of the leading stocks are also now very extended and the $T2106 is in over bought territory. All of these are telling me that some sort of pull back next week is very likely. So I am looking for one of two scenarios: a tap back to the up trending line off the August lows shown above as the yellow line or a pull back all the way to the August lows and possibly an undercut shown above as the blue line. So it should come as no surprise to you that all of my watches for Monday are shorts. Here they are:
Good luck and good trading!