Toppy Markets Confound Technical Analysts

Woody Dorsey, president of Market Semiotics, said his proprietary sentiment indicator registered a 99% bullish reading on Tuesday, but like Dickson he dismisses the significance of this, noting that sentiment is not a determinant of the market.

"Even though the market is overbought technically and overoptimistic short term, I would not say the party is over," he said.

Dorsey, who specializes in investor behavior, expects the market to retreat for about a week before resuming its ascent. The absence of any big negative headlines, such as war with Iraq or deflation, and the "larger liquidity boom" should help carry stocks forward into May, he said, adding that volatility is also likely to increase.

"We haven't had a really good short-term correction in quite a while, and this has frustrated so many people, but volatility is going to pick up over the next few months, which means the corrections will also be bigger," he said. "The stakes are getting higher here."