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More New Highs? Will This Stock Market Ever Come Down?

NEW YORK (TheStreet) -- The DJIA and the S&P 500 set new all-time closing highs on Tuesday, in what has now become a stock market that will never go down again.

The DJIA finished higher by 129.47 points at 16956.07 while the S&P 500 was higher by 13.09 to close at 1973.32. The Nasdaq powered ahead by 50.47 to close at 4458.65 and the Russell 2000 closed up 12.99 at 1205.95.

The tech-heavy Nasdaq continued to be the go-to sector as the momentum stocks that were clobbered to the downside in March are now the darlings of Wall Street again.

I attribute this euphoric rise in the stock indexes to the short hedge funds that have no other option but to cover their short positions at the all-time highs. Yes, they are the same hedge funds that were shorting at the lows early this year. This "throw in the towel" scenario may continue for the rest of this holiday-shortened trading week.

>>One Big Investor Loves This Small Stock -- Should You?

Even the old Wall Street pundits are now all-in with this bull market. I may be the only skeptic remaining. That is just fine with me. I do not like to follow the crowd.

One of the best confirming internal indicators that I use continues to show there is absolutely no power or force behind this market move to all-time highs. As the price of the indexes move higher, the force behind the move is showing a negative divergence. As the generals continue to climb the mountain higher, there are fewer and fewer soldiers to back them up or provide support for the move.

At some point the stock market will fall under the weight of the move higher without the support of the soldiers. When this will happen is unknown. But the signals are all in place. If you must chase this momentum higher and higher for your performance, good luck to you. The risk is great.

Another bit of anecdotal evidence of an economy that is not quite what it appears to be is the Capital Goods New Orders Nondefense Excluding Aircraft and Parts (CAPEX). The orders have been showing lower highs since February 2012 and are in a solid downtrend.

So I continue to be very patient and pick my spots for going long and short in this stock market. My risk management process has served my subscribers extremely well in 2014. Some subscribers have returned in excess of 30% so far.

On Tuesday, I closed out my long position in Inteliquent (IQNT) that was purchased on Monday for a very nice gain. I also added to my Twitter (TWTR) short and started a new short position in Splunk (SPLK). TWTR is overbought while SPLK is extraordinarily overbought. All positions can be found at

At the time of publication the author had positions in TWTR and SPLK.

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

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Chart of I:DJI
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NASDAQ 4,775.3580 -29.9330 -0.62%

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