BUYER BEWARE

The market has "BROKEN OUT" to new six year highs and according to most commentators its straight up from here. Just be sure not to let the facts get in the way of your trading. My sources that have done their homework and tell me that as a general rule after the market trades at a new 10 day high, the average gain is approximately zero % after one week. The average weekly gain for the markets after they have made a new 10 day low is over 1/2 of one percent. The rule of thumb (listen up Jimmy), do not buy new 10 day highs but do buy new 10 day lows.

In addition, looking at the SPY chart, the 2 day RSI traded well over 90 on Friday and closed at 89, also an indication of a time for selling and not buying.

Looking closely at the chart above, one can plainly see a strategy in this market environment of buying low 2 day RSI's and Selling high 2 day RSI's. We are at the point of a high 2 day RSI (HINT SELL SELL SELL).

The VIX closed a bit below its 10 day SMA after trading 6% below earlier in the day on Friday. Another reason to let the "buy em higher, sell em lower" crowd have their day in the sun.

The final reason not to chase, the SPY has a nine point (90 cent) gap to fill from Thursday's high. The general rule is that gaps like that seldom go unfilled.