Big Picture Update: Uptrend on Borrowed Time

While the long term and intermediate term trend indicators are still registering as uber bullish, there are several reasons for near term caution.  

1) First, our Moving Average Momentum indicator told us that both sentiment and market have reached extremes that almost always lead to a significant local high and pullback.  It was looking for this no later than 3 Nov. There have been times that the market continued on for another week after this type of signal, but a pullback can now be considered overdue and quickly approaching.

2) Even though the MarketMood Indicator (MMI) is pointing up for the day tomorrow, the mood pattern is one that can accompany an abrupt change in sentiment, and a somber tone.  The mood pattern for Saturday, even though the market is closed, is a completion pattern.  Often this would be a good spot for a near term trend completion.  MMI is "undefined" for the weekend, so it won't be giving any clues as to likely direction for RTH open on Monday.

3) The weekly mood pattern for the coming week points to a big focus on government related matters, and either being involved in a crisis or trying to handle a crisis.  This could be a time for the U.S. government to finally get a handle on what it's going to do with the infrastructure bill, or for negotiations to completely fall apart. 

As of today, there are no daily signals just ahead that are specifically pointing down, there are no sell signals, and there are no trading indicators saying that shorting would be a good idea at this moment.  There are however, caution lights flashing and plenty of warnings against complacency.  A pullback is coming, that is a given.  It may start today, tomorrow or next week. It's important to be aware that as of today, the rally of the moment is running on borrowed time.

Dr. Cari Bourette is an analyst at ElliottWaveTrader.net, where she provides her proprietary market mood analysis in our flagship service, "Avi's Market Alerts."