One extension is taken out after another. The next price target based on an extension projected from the bottom of the most recent structure is 8271 (the 2.618 extension). Yes it is hard to believe price can make it that high, but this market does not care what we believe.
At the moment, there is not much on the chart that shows any signs of immediate weakness. Pull backs are shallow and no where near any major support levels. This is why I have been saying in order to trade this market and keep your risk low, it is important to stay focused on the smaller time frames where you can make adjustments quickly. There are opportunities both long and short if you have the plan and the agility.
As far as shorts go, this market reminds me of the Dow back in 2007. At the time, the market was relentlessly strong and I felt that the strength was simply unjustified. So I was shorting it and getting hammered over and over. It was pushing 14k which were all time highs. Eventually the market sold off, that was some time in 2008. I was a little early.
The lesson that I learned besides not to short a market pushing new highs is this: If you are going to short the bigger picture, at least wait for some form of structure like a on a large time frame like a 4 hour or above.This may require a ton of patience, but even if you are wrong, and the market still goes higher, your chances of a profitable outcome are much better.
Shorting a market on new highs because you feel "how much higher can it go?" is a bad reason to be short. If you want to see a great example of a market that offered structure for bigger picture shorting? Look no further than the EURUSD on a 4 hour or larger time frame. after . That is what a bigger picture short looks like.
Now if you are day trading than you can get away shorting as long a you are taking your profits quickly. A shallow retrace for this market is 300 points, which offers plenty of opportunity for this type of strategy.
As far as my plan for this market (since I am looking for longs only), I would like to see IF price can retrace back to 6567 which is now the .382 of the recent swing. While a break of that level can take prices to the 5798 area which is the .382 of the broad structure. IF the market retraces to either one of these levels, that is where I will look for reversals for a possible swing trade long. I do not expect a retrace of that magnitude until after the upcoming fork is out of the way. Also remember that in order f or a retrace like this to unfold, something will have to surprise the market. Just like the Chinese government nonsense over a month ago. Remember that? Yeah neither does this market.
In summary. strong markets like this are not driven by logic, and as one trader wrote in a previous comment, "Noone wants to buy the top" so it tough not to get involved one way or the other if you let your emotions get the best of you. Taking swing trades at these levels is high risk long or short (unless you don't mind taking 1k points of pain). Day trading is where the best opportunities are because you are looking for small profits (30 points is small). In terms of proportion, this market can see the 8k level, especially since there is no real selling signals to speak of. My plan as I have written before is to wait for a retrace back to one of my projected levels and look for reversal from there for a swing trade long. No need to get emotional, just a matter of waiting.
Comments and questions welcome.