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Like a Broken Record, the New Volume Low Just Goes On and On...

NEW YORK (TheStreet) -- Another day of the same old market on Wednesday. The S&P 500 set another all-time closing high at 1927.88, finishing up 3.64 points. The DJIA closed up 15.19 at 16737.53, just short of an all-time closing high. The Nasdaq closed up 17.56 at 4251.64 while the Russell 2000 was up 5.07 at 1131.22.

What did change on Wednesday is the S&P 500 Trust Series ETF (SPY) closed with a new volume low in 2014. The SPY finished with just under 55 million shares traded. This was roughly six million shares short of the Jan. 22 low-volume mark of 60.8 million shares traded.

There is something fundamentally wrong with this stock market. The lack of liquidity is not a good thing. I am not going to speculate what may or may not occur but if the hedge fund machines decide in unison to start selling there may be no machine underneath this market to absorb all that selling. Hence, my fear of lack of liquidity in this market.

We have seen situations similar in the past. The 1,000-point drop in the most recent past brings back memories.

I will once again reiterate my stance that the only players, or buyers, in this market are the hedge funds. They have caused extraordinarily overbought conditions at the present time.

My internal algorithm process is currently signaling the large-cap sector with a 5:1 ratio of overbought stocks versus oversold stocks. That is unprecedented in my work.

Extreme caution is warranted on the part of traders and investors alike. You must be patient and let this euphoric buying and chasing play itself out. Emotional buying for fear of missing is not a strategy for success. We are closer to a top as opposed to a bottom.

Mortgage purchase application volume dropped another -3.6% week-over-week. Refinance application volume has also been negative the last 2 weeks, falling -2.9% this week and -1.4% in the prior week despite falling interest rates.

Thus, as you can see, the stock market is dismissing any negative news right now. I hate to use the word bubble, but I am getting that bubble-like feeling in this stock market.

Be careful. This is not a normal market environment. Wall Street pundits will put any positive spin to fit their bullish positions. I am neither bullish nor bearish. I follow my algorithm numbers and the disparity between overbought and oversold is very significant. Take notice.

In Wednesday's trading, I sold my Direxion Daily Semiconductor 3 (SOXS) bought Tuesday for a 1% gain early on and reestablished that long position at the close. I also started a JetBlue Airways  (JBLU) short and a Broadcom (BRCM) short. Both are flashing extraordinary overbought.

At the time of publication the author was short JBLU and BRCM with a long SOXS.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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