A high risk of gas pump explosion

First of all, HAPPY CHRISTMAS

Have you ever remembered a time when stocks were suffering a steep decline? Conditions were oversold. The Volatility Index (VIX) was spiking higher. Investor sentiment (a contrary indicator) was overwhelmingly bearish. And stocks were falling nearly every-single-day. I don't think many people, if any, can think about such a time but it was just two months ago, in October. At the time, the world seemed to be ending with SPX crashing down towards 4100. That was the time nearly no one was thinking the market could go up again! But the Market God did fiercely fight back and we are close to all-time highs now.  

Now we are just in an opposite situation where conditions are overbought. The VIX is trading at its lowest level in three years. Investor sentiment is off-the-charts bullish. And, stocks are rallying every-single-day.  This is the time when no one believes the market will ever go down again. But it will, probably in an epic way surprising most folks out there. So it is the time to be extremely cautious!

Watching the stock market right now is like watching a trash can fire next to a gas pump.

The fire itself is contained, manageable, and doesn't pose any serious threat. But one small change, an errant spark, or a shift in wind direction, can create an explosion.

The moment is dangerous and is coming……

I just wish the explosion won't happen during the holiday season to scare away Santa Claus!