Walking on a cracking ice pond

 

While the market is making all-time highs as momentum continues, its breadth is narrowing. The number of stocks trading above their respective 50-DMA continues to decline as the market advances, along with the MACD signal. Furthermore, the NYSE Advance-Decline line and the Relative Strength Index (RSI) have reversed, adding to the negative divergences from a rising market. While this does not mean the market is about to crash, it does suggest that the current rally is weaker than the index suggests.

 

These negative divergences have often preceded short- to intermediate-term corrective market actions. Could this time be different? Sure. The entire bet of the market remains mired in the Fed cutting rates. That narrative is still alive and well, at least on the surface. However, like walking across an ice pond, while you can hear the ice cracking beneath your feet, one is never sure exactly when it will give way.

L. Roberts 

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Returns have been easy...too easy

Key points: Over the past 150 sessions, the S&P 500's returns are more than 40x the standard deviation of its daily changes These "easy money" returns are the 2nd most extreme in 25 years, next to January 2018 Over the past 50 years, high returns relative to volatility have mostly preceded losses       SentimenTrader