Now had this come after a prolonged contraction in prices then I would be very excited about the prospects. The fact remains however that equities are in a very dangerous position on the intermediate term and the longer it takes to move lower and get rid of the many intermediate term excesses then the more painful the decline will become.
The chart below shows yet another negative divergence in the equity markets with the S&P 500 moving to a new high, but the cumulative Advance to Declines does not confirm.
The most telling momentum picture that shows the weakness of this market is the Summation Index, which has been making lower highs for better than a year now as the market continues higher. The reason I say this is the most telling sign is the fact that this anomaly is ALWAYS rectified and this time is no different.
Keep your hedge in place and do not get sucked into this blow off rally, it will only bring your portfolio pain in the near future.
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