‘Euphoria Has Set in’

From Mark Hulbert @ MarketWatch

Euphoria has set in, and investors will be in for a rude awakening

Here is the graphic (Hulbert Stock Newsletter Index) from the article…

hulbert

While we’re at it, here is the latest Investors Intelligence data, which is probably popping nicely after today’s festivities…

ii

We of course add these to observable evidence of unhealthy market internals like over bullish AAII, fading Participation Indexes and declining Quality-Junk bond yield spreads and we are aware that moderation and perspective amidst the building euphoria is a good way to go.

SPX participation shows a fade (green) but not yet any active lurch to the negative.  Just a nice, ‘steady as she goes’ bearish divergence.

spx.part

There are other markets and indicators we’ll review in NFTRH 318, but as just one example, we have charted a bullish pattern on Canada (EWC) and it has further upside to reach target now that it broke above a certain technical parameter.

There are all sorts of other things out there telling me that the rally could have just a little more to go.  But we are coming down to the wire unless the unhealthy divergent backdrop is to persist longer than normal. It’s not going to just go away on its own without a market correction of some kind to clear it out.

I can’t get Wall Street/bank bonuses and a good old Santa/January Effect promotion by the media out of my head.  Yes, we are the site(s) that tune down conspiracy and hysteria, but it sure does seem interesting that the divergences are growing weekly and the market is in such an interesting window (i.e. thought by most to be a bullish period).

Think about how things might look at a real top.  We are heading there from so many different angles.

Subscribe to NFTRH Premium for your 25-35 page weekly report, interim updates (including Key ETF charts) and NFTRH+ chart and trade ideas or the free eLetter for an introduction to our work. Or simply keep up to date with plenty of public content at NFTRH.com and Biiwii.com.