Never Ending Rally?

The US stock market is late in the bullish season with  long- and short-term bearish momentum signals, yet the rally continues.  Could it rise for several weeks or months without at least a correction?  Highly unlikely,  at some  point all trends end.    

On 04/29/21 the S&P 500 (SPX) and the Nasdaq Composite (IXIC) made new -all time highs.  This is a potential bullish “Rule of the majority” signal but as I’ve noted before this signal may not be valid in a blow off  top.  The nature of the April 2021 rally looks like a blow off  top.

The daily VIX/SPX chart courtesy of Trading View illustrates a short- term bearish sentiment signal.

The VIX usually makes  higher bottoms when the SPX registers intermediate and major tops. In March 2021, the VIX  had higher bottoms with SPX all-time highs but subsequently the VIX made a new low.  Now the divergence has reappeared – currently a double divergence.  Keep an eye on the VIX, lets see if this divergence holds.

The SPX on 04/29/21 opened  above the stop  loss level of 4210. This was a 50% position from a trade initiated on the SPX open 04/12/21.  The total move up from 04/12/21 to 04/29/21 was 2.28%, the loss for the 50% position was 1.14%.  A  recommendation was made to short 50% non-leveraged SPX related funds on a move below SPX 4114.82. This remains a recommendation.

The very short-term Elliott wave pattern is unclear.  The situation could be clarified by 04/30/21.

On 04/28/21 there was a tremendous amount of bearish evidence, and it was stunning to see the SPX and IXIC make new highs. At the 04/29/21 SPX session end there was still a tremendous amount of bearish evidence.  The action of US stocks on 04/30/21 could break the back of the bull market.