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Fragile markets and consequences

DIA chart with resistance level
DIA chart with resistance level
Stockcharts.com

As the Dow Jones Industrial Index, Nasdaq, and S&P 500 are all reached at an all-time high, we must be cautious when playing this game. DJIA at 14,839.80; S&P 500 at 1,597.57; Nasdaq at 3,328.79.

Now, markets are at the major resistance level; thus, it has potential to go down when there are some bad news coming out. This Wednesday's Fed's decision is quite possible for an reverse change in trend.

The markets are gaining momentum through governments' actions. If the government won't continue its easing, then the markets will react to such news and move downward. Although many analysts and investors think the Fed will continues its easing policies, I believe tomorrow's news from the Fed has a negative impact on the markets.

It does not matter - the graph is your friend. When I look at all U.S. markets, I notice they are all at the major resistance level. If they break this resistance level, then it will be another upside trade. However, the chance to break this resistance level is below 50%.

Let's look at the pictures in the slideshow - all at resistance level. I believe there will be a short-term correction very soon. As there is a phrase - "Sell in May and go away."

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