As of November 18th, sentiment for the S&P futures and the Nasdaq Index is approaching nosebleed territory. The infusion of hundreds of billions of dollars on the Fed's balance sheet since Mid-September has pumped the stock market higher in response. But no matter how big the balloon, if you keep puffing it up, sooner or later it is going to blow. The DSI at 90 for the S&P and 91 for the Nasdaq Index suggests a top is coming soon. Not today but soon.
In addition, the sentiment indicator for the VIX is nearly at a record low at a reading of 10 saying investors show little fear. When the DSI for the stock market indexes is high and for the VIX is low the fireworks are about to begin.
At the very least we should have a correction. If the stock market bubble bursts, life is about to get very interesting. Combined with sheer panic on the part of the Federal Reserve, caution on the part of investors is probably a good idea.
Bob Moriarty founded 321gold.com, with his late wife, Barbara Moriarty, more than 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.[NLINSERT]
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