Markets Set Up For Blow-Off Top?

by The Investment U Research Team

With fear subsiding that the worst economic crisis since the Great Depression has been averted, the global markets resumed their uptrend from last week, stocks jumped this morning.

And while that’s a good thing for many looking to recover some of their losses, it’s not entirely “coming up roses.”

The concern is that without strong fundamentals driving this market upswing, we are setting ourselves up for a blow-off top – a trading pattern that is marked by an increase in volume and sharp upward price movement followed by a severe drop.

Anyone see some similarities here?

Over the past couple of weeks we’ve heard the mainstream media talk about a significant pullback, which talk of such has almost dried up. This is either proof that there won’t be one, or an ominous warning sign that everyone is jumping into the pool.

And when everyone who can is “in the pool” the water level can’t go any higher. When that happens, the water (market) levels will go down – and quickly – as everyone rushes for the exits.

There may be plenty of optimism running rampant on Wall Street, but without fundamentals, namely real earnings, this rally will loose steam at best and severely correct at worst.

• “Sharks” Starting to Wake Up
• Double Bottom For Markets?
• Risk Returns – And So Does Fear

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One Response to “Markets Set Up For Blow-Off Top?”

1. Arin Says:
   September 1st, 2009 at 5:01 am

   What date is this?

   Reply

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