Huge rally today due to AAPL earnings and market is close to giving a "buy" signal on intermediate time frame. EMAs are touching but SPX is already above SMA 120. Tomorrow even a flat day will cause the EMAs to cross.
The trouble is that we had too many "buy" and "sell" signals in a short period of time and this is an indication that market doesn't have a clear trend and most likely is going to trade in range in the near future (weeks or maybe months from now). The range so far is 1,360-1,391 but the range may get larger in time. If we are going to see the market moving down tomorrow that will mean that the upper edge of the trading range is going to act as resistance. However, if market establishes a clear higher high, in the 1,395-1,400 area we should expect further upside movement. Tomorrow is going to give us some clues, unless is going to end flat.
As I mentioned many times EMAs crossing doesn't work well when market is undecided, it works only when market is trading strongly up or strongly down. In times like this I usually switch to either 30 minutes or 2 hours chart using the same pair of MAs. 30 minutes charts give faster "buy" and "sell" signals but also generate a lot of whip-saws. 2 hours chart worked pretty well lately since it avoided the March whip-saw but gave a clear "sell" signal in April. If market is going to give a "buy" signal on hourly chart tomorrow I am going to wait for a confirmation on the 2 hours chart before going long again. I am going to lose a few points by waiting longer but is going to be safer this way.