Market made a new high early in the week then pulled back and started to consolidate the recent gains. The small cap, Russell 2000 pulled back with a bit more conviction than the other major market indices. This is probably due to the recent speculative run up on some of the small cap stocks. But by no means is this pull back signifying a top has been made by the Russell 2000. It might have been, only time will tell. But at the present there is no evidence to indicate it has made a top.
Looking at the chart of the indices, many of them hit the Fibonacci extension level before they pulled back. If these indices retrace below the previous 100% Fib breakout level, then one need to reassess the validity of the current Fib swing and might require establishing a new Fib with a more recent swing levels.
Until the market has clearly signaled a top, one should resist in shorting this market.
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Disclosure: Long DIA Call.
