One week ago I posted that I thought the stock indices were about to move sharply higher. They certainly have. All of the indices (specifically the four primary US trading indices – S&P / ES, Dow / YM, Naz 100 / ENQ, Russ 2000 / TF) continue to develop higher in Initiative fashion. Predicting the end of the rally is at a fever pitch. The S&P cash index is up 10 of the last 11 trading days. Is it “overbought”? We’ll only know in hindsight.

Immediately above Monday’s close is the all-time closing high at 1565.31 and the all-time print high at 1576.09. Both of those levels are purely psychological at this point, but it is going to be fascinating to see what happens with each passing day as the S&P closes in on those levels. I don’t “do” predicting, but I’ll make an exception this once: I predict volatility is going to soon increase, and possibly dramatically.

Here are the downside Key Reference Areas for the futures (June) and cash contracts mentioned above. A close below these levels by all four of the indices would be an initial objective signal of a potential top beginning to form.

S&P: 1543 – 1539; ES: 1549 – 1546

Dow: 14376 – 14362: YM; 14310 – 14292

Russell 2000: 929 – 928; TF: 937 – 934

Nasdaq 100: 2793 – 2788; ENQ: 2788 – 2784