Personally, I think even attempting to call a top on this character of an equity market is an exercise in the self-infliction of pain for now. It has been a long time since I’ve seen this type of speculation, but it’s been never since I’ve seen this type of monetary largesse. Moreover, when was the last time both the Fed and politicians have meaningfully attempted to “shape” societal perceptions, let alone hoped for economic outcomes, via manipulation of the financial markets? We know capital is “concentrating” right now, and the repository is US and large global equities. The Fed has been 100% successful in forcing capital into equities and real estate, exactly as their years ago game plan detailed. Likewise, with the tapering genie now out of the bottle, we are watching a rescission of global capital that originally spread out across planet Earth as QE went to ever greater heights since 2009. The outgoing tide is now coming in. These two forces, domestic investment concentration in one asset class and an incoming tide of liquidity from broader global risk assets (think emerging markets, commodities and the metals) characterizes the moment. And for now, liquidity and the weight and movement of global capital trump strict fundamentals. Nothing new, we’ve been here before.

But a funny thing happened on the way to new equity highs recently, for the first time in many a moon we’ve begun to see more than a few noticeable technical divergences. Remember, technical analysis is a suggestion, not a hard and fast mandate. It suggests to us what might be, as opposed to definitively speaking to what will. Technical signals, especially in this character of a market, can change meaningfully and fast in both directions. A lot of tried and true historical “systems” have simply broken down for now. After all, technical analysis is tough enough in a free market environment, let alone the type of one in which we now find ourselves. As always, adaptability is essential for survival.

I promise, the last thing I’m trying to do in this discussion is call a top. This is merely an attempt to provide perspective. I’ve seen many a market that was a “no lose” environment…until the losses started. I’ve seen markets where complacency reigned for an extended period…until it didn’t. You know the routine. So rather than pontificate about where equities are headed next, primarily because I have no idea (and neither does anyone else), I thought I’d simply let a number of charts do the talking. Again, perspective, not predictions.

One very apparent divergence we’re seeing right now is the NYSE advance/decline line relative to the S&P itself. The cumulative AD line has been in a range since mid-May, while equities have journeyed to recent new high territory.

….read more and view 8 more charts HERE