Sound The Alarms

I woke up this morning and turned on my computer and checked the CNBC website. Some of the top news, and so called informed analysts are saying the stock market is about to RIP HIGHER, as you can see on the screenshot I took today (see below).

CNBC headlines

It seems over the last few weeks I have noticed 3 things that are quite concerning to me to say the least.

1) EVERYONE IS STARTING TO GET UBER BULLISH, AND THINKS THE MARKET WILL NEVER COME DOWN AGAIN!

2) THOSE THAT LOST MONEY IN THE 2008 ARE NOW GETTING THEIR CONFIDENCE BACK AND THINKING ABOUT PUTTING ALL THEIR MONEY BACK IN THE GLOBAL MARKETS BECAUSE THEY DONT WANT TO MISS A BIGGER RALLY COMING?

3) A LOT OF TRADERS & NEWS KEEPS GETTING MORE BULLISH BY THE DAY. 

Hmmmmmm!

To me I am starting to spot a pattern, yet again, that occurred at the end of JUNE 2013, where alot of traders thought the market was about to SELL OFF and CRASH. Not only did this not occur, but we halted and SKIDDED UP HIGHER, very quickly! This was an area where everyone got VERY BEARISH...infact too bearish, and got caught out! OUCH!


Right now, if you have a look at the chart below, I am starting to think the opposite could be happening. At the sentiment trader, we like to stay with the smart money and go against what the average crowd out there is thinking. This has paid off very handsomely for us in previous times.

With all this positive news, and crowd starting to get to a point that could be termed as : OVERLY BULLISH, this is a big warning sign for me, and not many people out there are picking up on this! I am hardly seeing any negative news these days, and that is a warning sign the market could be about to take a break from the relentless buying we have seen in the last several weeks.

I mean even though we are in a BULL MARKET, I have never seen a bull market go up in a straight line. So the next few weeks are going to be interesting. But the chart below is a good lesson for any traders out there, that tend to find they are getting either too bullish or too bearish at any one point during the year. It is a good example, because this market can turn on a dime so to speak and the market can endure healthy sell offs even in a BULL MARKET.

crowd is getting OVERLY BULLISH

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