This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

A Euphoric Stock Market Setting All-Time Highs Built on Air

Stocks in this article: SPY TWTR SQQQ

NEW YORK (TheStreet) -- Another new all-time closing high for the DJIA and the S&P 500 on Thursday. Is anyone surprised? I did not think so.

The DJIA closed up 92.02 at 17068.26 while the S&P 500 was higher by 10.82 at 1985.44. The Nasdaq climbed 28.19 to close at 4484.92 and the Russell 2000 finished up 8.65 at 1208.15.

The Russell 2000 is the only index that has not surpassed its March 2014 highs. It is very close but still a fraction away.

Thursday's holiday-shortened close had the same exact feel that the other trading days have had. The stock market was higher on air.

>>FIFA World Cup Still a Huge Draw Without U.S. Team

The S&P 500 Trust Series ETF (SPY) volume closed at 52.5 million shares traded. One year ago today, July 3, 2013, the SPY closing volume was 75.2 million shares. I will continue to highlight this trading volume fact because it will become a huge issue. That issue will come to the forefront when the short hedge funds are at the end of their "throw in the towel, cover at any cost" mindset.

I suspect we are closer to that reality than any perma-bull may think. The amount of chest pumping, euphoric excitement over this bull stock market is now at the extreme level.

One issue that has been extraordinarily important in this bull run to all-time highs with no correction has been the shear number of hedge funds that have been short the S&P 500. Hopefully, these past few days, with this no-volume melt up, took down some of the two-year highs in S&P futures/options net short positions. I suspect that is what occurred this past week.

Time will tell, but the internal evidence, according to my algorithm process, is confirming this phenomena. The lack of trading volume is also suggesting no players in the stock market other than hedge funds.

For the first time since I started time-stamping my stock trades according to my algorithm process for the world to see, which is one year ago this month, I have "0" large-cap stocks on my extreme oversold scans. That is unprecedented and a sure sign of a bubble. The amount of negative divergences within the stock indexes is another reason for concern.

I will continue to point out these internal indicators. These are the indicators that will cause the downside avalanche in stock prices. So, I will continue to be extremely cautious on the buy side and use my indicators opportunistically. They all point to stocks that are extraordinarily overbought, both small cap and large cap.

On Thursday I closed out the remaining short position in Twitter (TWTR) for another win and started a long position in the UltraPro Short QQQ (SQQQ). SQQQ is extremely oversold. My positions, all 760 trades, are time stamped at www.strategicstocktrade.com.

At the time of publication the author was long SQQQ.

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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs