The McClellan Oscillator has now made a lower high from its October peak which was the initial thrust off of the low for this this rally. At most we might expect one more push higher in the NYMO to form another lower high as the SP500 pushes into resistance in the 1360 to 1370 zone. The momentum of the NYMO has turned sharply lower, which suggests that a correction may come sooner than later.
This is not the time to be the hero as a multi-week rally into old highs rarely breaks through on the first try, just as it could not in November 2010. I will be selling short-term and intermediate-term long positions this week, and looking for shorting opportunities in individual stocks, but not in the indexes, in anticipation of a correction lasting 2 to 8 weeks that should bring the SP500 back down to the 1300 level, which will probably be a great place to get long again.
So far, this has been a great year for longs, and I expect it will continue to be so.