The markets are partying today. The SPDR S&P 500 ETF (AMEX:SPY) hit a high of $127.80, a gain of 3% at the open. Word hit late last night that the European leaders agreed on a major deal to relieve Greece of 50% of its debt burden. This buys it more time to get its house in order. This was largely expected but still a positive for the markets.
While most amateurs are bullish, the charts speak differently. There are three major signals that have me going short at the open.
1. The SPY shot up into the 200 moving average on the daily chart at the open.
2. The markets are up 18.8% off their lows of just three weeks ago. The SPY hit a low of $107.50 on October 4th, 2011. As of today, the SPY hit $27.80.
3. The SPY also hit the former neck line of the head and shoulders pattern on the daily chart. This adds an additional technical resistance point.
The combination of the euphoric world and the key resistance points has helped me decide start to accumulate shorts.