Looking for a top here in equities

[Bob from Buffalo]

Can't help but noticing the low quality stocks are moving up in a big way these past few days.  Seems like the final short squeeze before the bear resumes or at the very least a substantial correction.  Gold made a parabolic top in December and remains over $100 dollars below that.  The baltic dry index made it's high in November and remains 1000 points below that.  Equity markets such as the Russel 2000 and Nasdaq 100 have been making fresh new 52 week highs as of late.  Keep an eye on the dow jones industrials to see if it can convincingly surpass it's january highs.  If it does, I would have to redraw my outlook, but i'm of the view it won't and the market will peak within the next couple weeks.  Anyone else have any thoughts?

[Steven Vincent]

Hi Bob. Thanks for posting this. I do agree that we will see a top of some kind in the next couple of weeks (perhaps sooner), however, I think that there is increasing evidence that any pullback will be a buying opportunity in a bull trend.

I see the fact that small caps, technology, retailers, financials, transports are all outperforming the broader market averages and making new highs as a very bullish indication.

We are also seeing key weekly moving averages being challenged or taken out on many stocks and sectors.

The trend is your friend...don't fight the tape! I am not married to any point of view or market position. The technicals of the market at this time are very bullish. I am ready to change with the message of the market when it changes but at this time it is saying "UP".

Get a free trial of BullBear Trading Service to get all my reports and videos: http://www.thebullbear.com/group/bullbeartradingservice

[Mark Lytle]

Hi Bob,

Back on March 5th, I posted on this blog that a warning of trend change would occur on the 11th, which is today..It is based on proprietary mathematics....So I am in agreement with you that a top could show up at any time here...My take on this market, is that it is liquidity driven, and that liquidity is quickly being removed. Ben Bernanke has said as much, in many recent appearances...further, 'insiders' in the largely co-opted regulatory branch of the government have made a lot of noise about restricting short sellers in various ways, recently. Would a fair and independent SEC do that? No. Would a fair and detached SEC even be aware something was coming? Also no. They have, what on Wall Street is coming to be known as 'perfect knowledge'. What's that? Insider knowledge. As the regulatory structure is in cohoots with the Phoney Crony Capitalists, who are fleecing the economy and the middle class of our entire wealth base, the press stand silent , or send out bogus disinformation about a 'recovery. This is criminal....

Since they know how to profit from destruction, through credit default swaps, they have basically taken out an insurance policy against the economy of the U.S., and now they will 'push it over' to reap the benefits.

This is much like taking out a fire insurance policy on your neighbors house, and then hiring an arsonist to set it on fire. Then you quietly pocket the money. After the smoke clears, you offer the victim some cash to take their damaged property off their hands. You get the land at fire sale prices. This is the plan for Greece. It has been done before in Argentina, Thailand, and numerous other small nations in the '80's and '90's....

Having perfected their methods, the bankers have turned their sights on the core of the western world...Western Europe, Britain, and the U.S.

This then, is the structure of the crisis in Greece, currently, and also the U.S. and Britain, although the press here will not do their job and report this criminal behavior...It is however, being widely revealed and discussed in the European press..and the fingerprints of Goldman Sachs and J.P. Morgan are all over these disasters...but here in the heart of the 'Empire', nothing. Silence..or disinformation..

This is why I could care less, about how bullish small caps look...The U.S. economy is in a planned demolition...

[Steven Vincent]

"This is why I could care less, about how bullish small caps look...The U.S. economy is in a planned demolition..."

Another way to state this is "I don't care what the market is saying, I know more than the collective intelligence of the markets and my intelligence is superior. I know what is happening and what will happen more than the markets do."

I am writing this to be helpful...that mode of thinking is death in trading and investing.

I am not saying that it is not possible that you will ultimately be correct in a bearish view....it's just that the markets do not agree with you at this time. I prefer to agree with the markets.

[Bob from Buffalo]

Mark, I do agree that the sovereign debt issues will likely be focal point of the next major decline.

Steven, I do agree market action is bullish, but it always is at the top. I would be careful on putting too much weight on the fact that small caps are outperforming large caps though. If you look at a chart of $indu:$rut take a look at what happened to the ratio in the months preceding the decline in september of 2008.

[Steven Vincent]

Its not small caps alone....transports...regional banks....large cap financials...technology....retailers...midcaps... the list goes on.

And the sector profiling of the market is not the only bullish factor. Long term moving averages are crossing and price is taking out major monthly and weekly moving average resistance on many key stocks, sectors and averages.

The list of bullish factors goes on and on but if you want more watch my latest market reports.

It is far more likely that we are at the beginning of a new bull move than the beginning of a topping process. And I reserve my right to change my position at any time.

The sovereign debt issue may not come to a head for another 1-3 years. Or renewed world economic growth may amerliorate the problems for some time.

[Steven Vincent]

Here is an excellent piece by Cliff Droke that discusses similar issues:

The End of the Stock Market Recovery?
http://www.marketoracle.co.uk/Article17794.html

Highly recommended reading.