Last night I said we might see a higher high and so it was today. But pullback is just around the corner, may be as early as next Monday, 11th July. If you remember what has happened between May and July, you will realize that this market is not really going anywhere. It is just going round in circle between bid and offer and as I keep saying, all these are a part of forming the top. The last week’s rally had come on absolutely thin volume, when retail participation has been almost non-existence and now everyone is worried that s/he will miss the rally. But we shall be mad to chase the rally now because markets have moved back from over sold to overbought.
If you are adventurous and nimble, you might want dip your toe in the shark infested water around 18th – 20th July for the long trade. Till that time, the best position is to remain in cash or if you were lucky enough to ride this bull rally, you may want to take profit now and keep your gunpowder dry for the next opportunity.
As for the Non Farm Payroll tomorrow, the pattern so far has been open high close low or open low close high. Either way, profit taking is warranted.