Like it occurred on the last week of January, this week SPX is on track of ending the week with another potential "toppish" candlestick.
It is a small range body that depending upon today's eod print it will leave in the chart a Hanging Man, Spinning Top or a Shooting Star.
Keep in mind that both momentum & breadth indicators are extremely overbought.
If we have a weekly small range body it means that price is unfolding an ending pattern that should complete the up leg off the December 19 low.
As a matter of fact as you can see in the 60 min chart below price has been unfolding a potential bearish rising wedge. If this wedge is the ending pattern that I have been looking then we need an eod print below 1352.28. If this is achieved then next week price should challenge last Friday's NFP gap with an "obvious" initial target at 1300.
If the potential bearish set up plays out then I expect a corrective pullback that could reach the trend line support from the October 4 low & gap fill (daily & weekly) in the area of 1289.
The main scenario remains the same with price unfolding an impulsive wave (C) from the November 25 low, which has a projected target at 1376.55
Therefore we clearly have an equity market in "rally mode", since last Monday every single attempt to kick off a correction have been aborted by dip buyers, but at the same time we have plenty of warnings that are signalling that a reversal should be taken seriously.
Yesterday's surge of TVIX (2x long VIX etf), which achieved a bullish Island Reversal, is sending another "big" warning that the overdue correction should be around the corner.