Superficially a bullish breakout, but behind the scenes both the SP500 and Dow met DeMark’s exhaustion topping criteria yesterday.
Supporting that, the breakouts/rallies were on low volume, the put/call ratio for the indices (CPCI) finished at one of its lowest ever readings, and the CPC and VIX also reached contrarian low levels:
A longer term look at stocks volatility plus treasuries volatility reveals historic compression:
Sentiment remains elevated, as the March/April falls in the Nasdaq and Russell 2000 made little impact:
So, put/call, volatility and sentiment all signal high complacency, whilst the last time we saw such persistent money flow into defensives was 2011:
I’ve added again to the SP500 and Dow short positions. Tomorrow is the full moon, let’s see if we get an inversion and bull trap.
To finish, this is how the Dow peak looked at solar cycle 20 maximum, namely a topping process at a turn-of-year solar top:
Underlying Source: FiendBear
As things stand, the current solar cycle (24) smoothed peak is likely to have fallen circa Dec 2013, the monthly sunspot spike in Feb 2014, the real Dow peak likely end of Dec 2013 and the secondary high here in May: all very similar to 1968/9.