thetechnicaltake's blog

Long term Treasury yields are on the rise and breaking out from their current trading range.

It was touch and go this week, but in the end and as suspected in last week's comments, the "this time is different" scenario will not play out.

These are an interesting group of charts.

It is those famous 4 words of investing that should have you running the other way and that should be relegated to the trash bin of investing along with such phrases as "stocks climb a wall of worry" and the "stock market can stay irrational longer than you can stay solvent".

The markets don't have to go down just because everyone is bullish, but if you are a "believer" and buyer at these levels, then you will need to identify a market top and get to the exits before the next guy to extract profits. This is a very crowded trade and identifying the top is a tall order.

If you don't want to assume that responsibility of managing risks, then you should be a buy and hold kind of investor.

While this data point is of interest, I would always ask the question: why use something if it doesn't work?

It was only 2 weeks ago that the "dumb money" indicator and Rydex market timers were bullish to an extreme degree and company insiders were selling shares at a clip that had not been seen in 4 years.

"Danger, Will Robinson, danger!"

There are two dynamics going on in this market. Call it force versus force. It is the overbought, over bullish and over valued market that should rollover versus the buyer of last resort, the Federal Reserve. And there can only be one winner.

If the market hasn't topped out already, it should do so within a couple of percent of the recent highs. Rallies should be sold and stops tightened up. The market is prone to sudden sell offs. There will be better risk adjusted opportunities to buy in the future.

Is the Fed pushing on a string?

With the sentiment indicators turning neutral, stocks will no longer have short covering to propel them higher. This puts the onus on the bulls - it is time to put up.

Buying conviction remains a big question as volume was the lowest total for any week since Christmas, 2009.

What has been missing from these signals is a lack of follow through.