Stocks staged a powerful rally with extremely solid breadth on Friday with volume slightly higher on the Nasdaq and basically flat on the NYSE. The move on Friday sent the SPX and DJIA to new 2016 highs and placed them within reach of new all-time highs. The Nasdaq and RUT remain range bound with the DJT still showcasing weakness overall. Due to the shape of the overall market our models are now under mixed signals with the DJIA SPX under operational BUY signals, the COMPQ NDX RUT and NYSE under operational NEUTRAL signals and the DJT under an operational SELL signal.

A lot of traders believe that the move on Friday was an extremely bullish move and while it very well may be the fact that it was not confirmed across the board definitely leaves a lot to my own personal imagination. It would be a much more bullish setup if we had the COMPQ and RUT leading but it appears with 10 year and 30 year bond yields still crashing that money is finding its way into the big cap dividend heavy indexes due to the highest spread between bond yields and stock yields in 8 years.

This past week, while stocks diverged higher, we saw bond yields hit new lows around the world. This extreme divergence is one of the strangest divergences I have ever seen. Not only did bond yields diverge but so did the British Pound and Crude Oil. Everything decoupled from stock prices which led the VIX to its biggest weekly drop ever. If up is down then down is definitely up as the v-shape moves continue to get more and more volatile. Its amazing to see these indexes retake most to all of the post-Brexit move back in such an extremely short amount of time.

Now I am completely open minded here. While I definitely do not like how the charts look on the indexes and individual stocks (they are loaded with distribution, zero accumulation, and yellow/red BOP) look right now as the indexes hit or near new highs, I will always 100% respect price action and trade off of it alone. That being said, I still know what a healthy uptrend looks like and what an unhealthy trend looks like. This recent move is extremely unhealthy. This is why following Friday's move, instead of being 100% invested on the long side like you would think I would be with us hitting new highs I am only 45% invested on the long side.