Anyone that pays the slightest attention to the stock market knows that the indices are up substantially since December 24. Most market professionals can quantify that even further and provide metrics that show exactly how overbought the indices have become and what technical resistance lies ahead.
Unfortunately, there isn't anyone that can tell you exactly when the market might reverse and trade back down. Most of the bears have been calling for some downside for weeks now and the bulls don't even want to think about that ugly corrective action in the fourth quarter.
We all know that a turn will come, so how do we go about making sure we don't give back a big chunk of our recent gains?
The way you predict a short term top in this market is to just wait until there is some weakness. For some strong emotional and psychological reasons most people are incapable of doing that. They want to predict a top rather than wait for some sign that one is occurring. If you call a top on a prospective basis you have a chance of timing it exactly which is probably the main appeal.
If you want to call a turning point simply looked at what happened back in December. You didn't have to be a 100% long at the close on December 24 to make good money going long. You had plenty of time to put cash to work in the next week or so and catch some upside. The vast majority of people that tried to call the bottom probably did so too early. They had to make unrealized losses before they were profitable so there was no benefit to being early.
Downtrends are different than uptrends but we are seeing a mirror of the December action right now. Just like everyone wanted to call the bottom in December, they want to call the top now.
My best advice is wait for it. Don't anticipate, react. This market is going to see a notable pullback soon so just be mentally prepared to react when it does finally occur. There is no need to pretend you are some great market guru that can predict the twists and turns. The market is much simpler to navigate if you stop pretending you can predict the future.