I believe the market is near a short-term top (that could to be a longer-term top) based on highly bullish sentiment and exhaustive characteristics of this rally. I am looking to short the market buy purchasing TWM (Russell 2000 2x Inverse ETF) around $18.
First, check out the Put/call ratio chart above. Notice that the ratio has spike to extreme bullish readings. Options traders are highly bullish following the last few days of the market rallying.
Notice on the IWM chart above (5y weekly chart) that price is nearing a major resistance level. Also, notice that the rally is in 7 waves (ABC-X-ABC)--this is normally a corrective setup. IWM has rallied more than 100% in 13 months with only small corrections in between. The time is ripe for a major correction.
Finally, on the daily IWM chart above, notice that after a massive, relentless run, the market gapped higher and rallied hard. These kind of gaps can often indicate exhaustion when the happen after an extended run, and I believe now is the time to capitalize on this setup.