In summary, all four major indices made new all-time intraday and closing highs this week. SP-500 should have support at the previous all-time highs near 3870. Below that, there is support at 3700, the January lows and the bottom of that brief selloff at the end of January, and then the important support level at 3630, the December lows.

 

What is a reversal top?

When an instrument makes a new 60+ day high, closes near the intraday low, then the next day, it closes lower than the prior day low on better than average volume, that is a reversal top. It typically brings a 10% correction when confirmed.

Note: RTY was going for it in the morning , trading below previous day low, but reversed mid. day, volume gave a hint.

Market bubbles happen all the time. What is important is what doesn't happen all the time, risk management, discipline and selling. If you do those things, it doesn't matter if we're in a bubble or not, you won't let your ego ruin you. Enjoy the ride, but don't forget raising your trailing stops.

In summary, institutional cash, which is often deployed heavily at the end of January and the beginning of February, came rushing into the market. In just four trading days, SP-500 had recovered all of the losses and had closed at a new all- time high. SP-500 bottomed out almost right at 3700 on Friday, January 29th, so that is support. There is also support below that, at 3630. That is the one that is more important, because a violation of that level would take the market below its December lows typically the sign of an emerging bear market. For now, the line of least resistance is to the upside, so stay long and enjoy the ride.