S&P 500 RSI(14) was at 69.95 on Oct. 28 which makes the market relatively overbought. The fact that all markets consolidated on Oct. 28 makes this a turning point.
- On a bearish view, the market would make a size-able pull back next week. It could be as early as on Monday. Unless there were bad news supporting this movement, I don’t think bears can do much damage here. Their won’t be sticking their necks out after getting burnt last week.
- On a bullish view, the rally will live on. Market will make a size-able higher high next week.
I’m bullish bias for the next few days. I don’t believe RSI will be forming a bearish divergence in this case. When the market changes its direction, most experts will be skeptical on the movement. I believe the markets will make a higher high next week. A small pull back will occur, however if the pull back wasn’t based on bad news, it will be bought.