The markets are rallying in such a manner that it is comparable to the sell-offs that we saw for much of January and February. The obvious understanding is that it can’t do this forever, especially since we are getting parabolic on the charts. Nonetheless, you can never underestimate a bull run and how far it might go before breaking down – even in a bear market. However, we are extremely overbought, and on a day where the markets broke out of consolidation, the VIX once again remained nearly unchanged.

Provided below is a chart of the S&P and the percentage of stocks trading above its 50-day moving average. What is interesting to note is that we are right where we were at the close of 2008 right before we saw the major indices plunge over 20% across the board. I don’t think we are out of the woods by any means, and that a lot of your ‘dumb’ money is flowing back into the markets and when that occurs, it’s likely we’ll see a another string of substantial sell-offs.

 

vix4209

Here’s the NASDAQ and S&P charts…

nasd4209

sp4209

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