Another low volume day this time with a new rally high and a close near the top on relatively low volume. Again we are rallying not so much on heavy buying but a lack of selling. Before getting too bearish, let me warn you I have seen this kind of rally go on for months in the 1990's and 2006. Now if you want to get bearish, one of our proprietary methods is calling for a top around 1107.79 in the cash S&P tomorrow or Wednesday. Please don't bet the house, let the tape reading show the way.
Just to maintain some credibility, the market tested the lows of the previous day last night as feared and the lows held. The opening had remarkably little volume and the market made a spring at 108.73. Points 1,2,3 were all volume spikes when the market went through a previous resistance point. Each of the ensuing rallies travelled less distance than the previous rally with 3 not having the momentum to go further than the initial spike. 4 barely penetrates 3 and has hardly any volume spike at all. Demand albeit slight has petered out. No selling follows.
For real estate, banking and housing, the bull market may well have ended as they are no longer following the market higher. Although not shown, anything in the oil patch is outperforming the stock market.
Junk bonds are out performing treasuries and quality long bonds. Stocks are out performing junk. Frothy?
