• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock Here’s Why A Short-Term Top Might Be Nearing
Stock

Here’s Why A Short-Term Top Might Be Nearing

by May 2, 2025
by May 2, 2025 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

I feel like the short-term risk is turning once again and I’ll explain why in my analysis below. Please don’t misunderstand. I suggested a bottom was in place a few weeks ago and I LOVE what has been happening in terms of manipulation/accumulation and I LOVE the fact that we were able to quickly regain both the 20-day EMA and 50-day SMA on our major indices.

However, here are the four major indices and where they’re at currently on their respective charts and their next key overhead resistance levels:

Dow Jones

We did manage to close just above the 50-day SMA here, but the Dow Jones still appears vulnerable to me. Given the fact that the S&P 500 has room to run up to what is now major price resistance at 5782, I could see the Dow Jones moving a bit higher to challenge the late-March high at approximately 42750. That could serve as a neckline.

S&P 500

20-day EMA resistance? No problem, went right through. Gap resistance 5500? Ditto. 50-day SMA resistance. Ditto. This rally has been impressive. Key levels of price resistance have failed and this tells me that we’re not going to violate the low at 4835. It’s set in stone, in my opinion. There are still a couple of key resistance levels on the S&P 500 that we’ll have to deal with next week. The first will be the early-April rebound attempt that failed near 5700. Today’s intraday high was 5700. The next one, however, will be the biggest on the chart and that’s where we last failed in late March – at 5782.

NASDAQ 100:

Looks similar to the S&P 500, but I did add the RSI to this chart. During downtrends, RSI 60 tends to be rather big resistance. We see many rallies fail at or near that level. The NDX just crossed RSI 60….barely. At our Friday intraday high, the NASDAQ 100 pulled within 100 points (less than 0.5%) of the late-March high near 20250. I don’t know if we turn here or not, but I do know the risks are elevated.

Russell 2000:

The 197 level offered great price support on multiple occasions, so when we see a heavy-volume breakdown like we saw in early April, we should recognize how important it is to clear that same price resistance on the way back up. We did so on Friday with gusto. I absolutely LOVE the sudden accumulation that’s taken place in the IWM. I believe that will result in a much larger move at some point later this year. But are we due for another round of selling first, perhaps at upcoming price resistance levels marked above? We’ll soon find out.

Be careful ahead, especially if a rising-volume, reversing candle prints on our major indices sometime next week.

Sentiment

Check out this 5-day SMA of the equity only put call ratio ($CPCE):

We just hit 0.55, showing the most complacency we’ve seen in the past 5 weeks or so. Extreme low readings have previously marked corrections and/or cyclical bear markets and that was one key topping indicator that I discussed back in January/February. Other prior moves down to 0.55 have also resulted in short-term tops. I thought the current .55 reading was worth pointing out for this reason.

Seasonality could also play a role. Early May (through the 5th) tends to provide historical tailwinds, but the middle part of May (6th through 25th) has a history of being rather challenging. The 5th is Monday, so given everything I’ve discussed above and knowing that our bullish seasonal window could soon be closing, watch for a potential reversing candle as a sign to think about reducing risk (covered calls, S&P 500 puts for insurance, moving to cash, etc.).

I’m not ready to definitively call a short-term top here, but I do want to point out that the SHORT-TERM risks of being long right now are growing. Do with that what you may.

If you’d like to follow more articles of mine, please CLICK HERE to join the tens of thousands who’ve already subscribed to our FREE EB Digest newsletter. There is no credit card required and you may unsubscribe at any time.

Happy trading!

Tom

You Might Also Like
  • Low Vol To High Beta Stock Rotation Is Surging
  • What Bitcoin Is, and How That Has Changed
  • S&P 500 Earnings Results Are In for 2024 Q1 and Market Is Still Overvalued
  • The Top Candlestick Pattern For Entries
Share
0
FacebookTwitterPinterestWhatsapp

previous post
The Easiest Road to Supercharge Your Investing Reflexes and Reactions!
next post
Stocks In Focus This Week: Palantir, Uber, and Coinbase

You may also like

May Begins A Very Strong Period For Growth Stocks

April 30, 2023

How To Manage Risk Using Technical Analysis!

July 11, 2024

Fasten Your Seatbelts: Earnings Season in the Spotlight

July 8, 2023

The BEST Way to Track Stock and ETF Performance

July 10, 2024

Heads Up! 10-Year Treasury Yield Could Go All the Way...

August 18, 2023

Secular Trends Contrasted with Deterioration

July 7, 2023

RRG is Sending a Clear Message And Finds Two Stocks...

October 20, 2023

Technology Shares PLUNGE to Kick Off 2024

January 3, 2024

The Ord Oracle May 2, 2023

May 3, 2023

Four Charts to Keep Inflation at Bay

February 16, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Week Ahead: NIFTY Stays In Technically Challanging Situation; Sector Rotation Shows Likely Change In Leadership

      May 24, 2025
    • United Airlines reaches ‘industry-leading’ labor deal with flight attendants, union says

      May 24, 2025
    • Trump clears Nippon merger with U.S. Steel

      May 24, 2025
    • 3 Stocks to Watch While Everyone’s Staring at NVIDIA

      May 24, 2025
    • Automate Your Scans with Ease! Sample Scan Library + Scheduled Scans Walkthrough

      May 23, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,736 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,440 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,423 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,399 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,279 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,096)
    • Investing (538)
    • Stock (2,569)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Week Ahead: NIFTY Stays In Technically Challanging Situation; Sector Rotation...

      May 24, 2025
    • United Airlines reaches ‘industry-leading’ labor deal with flight attendants, union...

      May 24, 2025
    • Trump clears Nippon merger with U.S. Steel

      May 24, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,096)
    • Investing (538)
    • Stock (2,569)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    QQEW Divergence vs. QQQ Shows Weak...

    April 28, 2023

    How the PROS Time Entry Points

    August 9, 2024

    The Halftime Show: Soft Landing, No...

    February 27, 2023
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here