Selling Into the Close Is Not Confirmation That the Top Is In

The close today was negative, however, it is not negative enough to confirm that the correction has begun. All that the S&P 500 did, was trade back down around Friday's closing price. The close also happened to be right at the bottom of a 4 day up-trend channel. We need to see further selling come in to get closer to a confirmation that a short-term top is in and that the correction has begun. A gap down to start tomorrow's trading session will be a step in the right direction. A subsequent lower close tomorrow will be a good sign that the correction has likely begun.

China Does Not Raise Interest Rates

It had been expected that China would increase interest rates to curb growing inflation as indicated by a 5.1% CPI, however, no such rate hikes were implemented over the weekend. As a result of the non-action, the Shanghai Index soared up almost 3% and equities around the world are looking strong.

Amidst this news, and the fact that the up-trend is still intact in US markets, there is no indication the market has topped yet, so it is still early to be short this market. Any shorts now are best as day trades. If you do insist on starting a swing short position ahead of a confirming signal, just make sure you have some hedge to the long side.