Be Careful Of What You’re Afraid of Missing

The markets reached an 8 month high today and breadth is wide. Normally that signals a bull trend. And to be honest, we could see one for a few more months. But that doesn’t negate everything else we’ve been talking about recently.

Chasing markets higher is a trap that the big market players set for the little guys. Take a look at volume, it is very low. What that means is little guys are chasing higher and big guys are letting them do it by standing aside. 

Rising market on falling volume

The above chart is from Alpha Trends over on StockTwits 

Here’s what I know about the chart, it is not a good sign. When sellers outnumber buyers, ultimately prices come down. At some point, I think by summer time, we see a tipping over of the market. 

I don’t know if it will be pure supply and demand for stocks that does it, or if an event will have to trigger a sell-off. 

If it is supply and demand for stocks that drives prices down, expect it to be ebb and flow with more range bound markets. In that case, we might have to do a bit more 2-3 month swing trading.

If an event, say Brexit, Greece, Chinese slowdown, any number of things, causes the market to shudder, we could get an elevator drop.

With seasonality starting to go against us, it pays to be cautious. 

Don’t get a case of “I’m missing-it-itis!”


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