The Dow Jones Industrials, S&P 500 and Nasdaq all closed at all-time highs on Thursday with the help of President Trump.  Only the Russell 2000 did not close at a new high. The Dow closed at 2,172, the S&P closed at 2,308, the Nasdaq closed at 5,716 and the Russell closed at 1,379.

After the market open, President Trump tweeted that is a few weeks he would release a phenomenal tax cut.  Then it was off to the races for the markets.  Of course, the markets never ask what's in the details.  

It remains to be seen how a huge tax cut along with massive infrastructure spending will be paired so the huge deficit that already exists will not continue to increase.  Remember, the debt to GDP is already at 110%.  Interesting days are ahead for the stock market.

In the meantime, the S&P 500 Trust Series ETF(SPY) - Get Report volume remains subdued, trading just over 65 million shares. The CBOE Volatility Index, or VIX, closed at $10.88.

A few days ago we showed a weekly chart of the S&P 500 that showed an extreme overbought condition according to our proprietary Strategic Stock Trade Numbers.

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You can see in the above weekly chart of the Nasdaq the extreme overbought condition of that index. When our SST Strategic Numbers become extreme overbought the path of least resistance is to the downside.  Sure, the indexes can continue to move higher over the next couple of weeks, but traders need to be aware of the risks when chasing stocks and indexes that are extreme overbought.

Finally, the Dow and Russell weekly charts have already turned lower based on our Strategic Stock Trade Numbers.  That is a negative divergence.  Two indexes heading up and two indexes heading down.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.