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There is mounting evidence that a stock market top of one degree or another is forming. There are mounting divergences among the indices with some of the indices trading at all-time highs (Russell 2000 / TF) and other indices showing relative under performance (S&P / ES, (Dow / YM) and Nasdaq 100 / ENQ). Breadth today was negative with the Dow continuing to make higher highs. Volume is pathetic. And on…and on…and on…
Even if a top is in the process of forming, most stock market highs of significance (>10%), take time (an important Auction Market variable) to form. While the indices may “invert V” top since anything can and will happen in the markets, it is far more probable there will be a topping process that includes one or two 1%-2% swings away from and then back to the close vicinity of what will prove to be the ultimate top. Understanding this process can give the Auction Market trader a huge edge when trading the stock index futures, or the ETF proxies for the indices.
