One of the things that I am sure about -- or at least as sure as you can ever be about anything in the market -- is that a sustained new bull market won't be on the horizon for a long time to come. The bursting of the biggest bubble ever in March 2000 insures it. I characterize the current rally as a countertrend move with limited life, not the start of a new major uptrend which could last for months or years.

The technical indicators I follow support this conclusion. The current very low and overbought TRIN (Arms index) readings are, I think, sell signals -- especially so for the


. The five-day TRIN for this market just recorded a 3.39, which is quite overbought.

At the high on Wednesday, the


(Nasdaq 100 Unit Trust) hit 40.24, which is just about a 50% rally from its Sept. 21 low of 27.20. A move to 42.49 would be a Fibonacci 0.618 retracement of the decline from the May high of 51.95 to the Sept. 21 low. That should be the maximum expectation for the rally, but I wouldn't be surprised if Wednesday's price of 40.24 turns out to be all we get.

Wednesday's gap up opening (26 points for the NDX futures) expended the market's energy from the military victories in Afghanistan and also the news that the American Airlines crash was apparently not terrorist-related. A sharp selloff looked like the start of something serious, but another quick rally took place before fading into the close.

It's important to note that many of the Nasdaq tech stocks that have been leading this rally lost ground on Wednesday.


(MSFT) - Get Report

was down over $2,



was down 83 cents,



was down 41 cents and



was down $1.90. I am short all of these. These stocks may be telling us that a correction is at hand.

The record put-trading in late September and October has now reversed to the point where the "dollar-weighted" (meaning that it measures dollar flow) equity put/call ratio is at the lowest (most bearish) level in over one year. I respect its message. The VIX, at 28, and VXN, at 56, have descended to the low end of their recent range, and they are also signaling that the market is vulnerable.

And if all that wasn't enough to convince me this rally is short-lived, there's more. One measure of sentiment that I watch daily is the "Vane," a daily survey of futures traders. It recorded a very low percentage (17%) of bulls at the Sept. 21 market bottom, but that number has now risen to 52%. This is above the 48% bulls recorded at the important peak of last May 22, 2001. A sharp retreat into mid-December looks like the most likely course to me.

Jay Shartsis is director of options trading for R.F. Lafferty, where he has authored his market letter Shartsis on Charts since 1979. Shartsis has also written The Striking Price column many times in Barron's. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At the time of publication, Shartsis was short Microsoft, Brocade, Broadcom and Emulex. Shartsis appreciates your feedback and invites you to send it to