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Is The Individual Participating?

6/3/2014 5:55:14 AM

Good morning Traders,

As we peruse the market activity here, we're at a critical point where the fuel that moves the market higher has run out, but there's a reserve tank, the liquidity from bonds. If bonds can turn lower here, stocks can enter a liquidity advance phase. If not, then the market is vulnerable. Here are two ways to look at that:

SPY versus Bonds relative Strength Chart

Looking out over a longer time frame:

SPY versus Bonds relative Strength Inverse Scale Chart

We're at the same point where we were in 06/07. It's taken a while to develop, and we could be a month away from the top actually forming, but the potential exists...

On CNBC this morning, they spoke of the lack of individual involvement in the market:

Equity to Index Option Volume Ratio Chart

Also one of our favorite indicators is also approaching an extreme:

Equity Put/Call Ratio Chart

And finally, the signal for the qqq trader is getting bearish again:

Daily Stock Barometer Chart

Generally these top and bottom conditions can exist, but the market needs a catalyst or lack thereof to move. So at this point I'd say the market is vulnerable to a correction, but in need of a catalyst to push it over the edge and initiate sell programs.

Everything could change on a dime, which will require us to act in our trading services. So stay tuned.



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