Red Flag – A False Breakout ???
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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