Red Flag – A False Breakout ???

Posted by on February 18, 2017 12:28 am
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There was something odd about this week's breakout to new all time highs.Well, not necessarily odd, just something to be aware of. A red flag perhaps.

Consider the following.

  • The breakout did occur on unusually low volume - Not a bullish sign.
  • Weekly/daily RSI and Stochastics are sitting at extremely high levels. It will be increasingly hard for the market to push higher here.
  • VIX/VXX are either at or near their respective all time lows.
  • Shiller's S&P P/E Ratio is at the second highest valuation since 1929. Just 0.35 points away now.

In conclusion, it is quite possible we are witnessing a false breakout and a bull trap.

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