So what to do now? If you are long, you may not need to do anything at all, just trail your stops. But if you are looking to get (conservatively) short, patience will definitely be needed, as the price will have to reverse and slice through some supports first. Aggressive shorts will be establishing between here and 1687 on SPX (without waiting for the reversal). Targets are aplenty below, all the way down to -15% from current level.
This may sound like a pipe dream, but volatility may come out of nowhere and increase exponentially in usually slow and illiquid end of summer. My favorite scenario is a double top here with steep downside through the beginning of September, followed by steady rally into the end of the year. Nobody is talking about a possible double top here, hence no one is ready for it.
|click on chart to enlarge|