The stock market is becoming jittery.

The reason is the so-called $1.5 trillion problem. The “smart money” (professional investors) has known about the problem and has acted accordingly, but the momo (momentum) crowd has been oblivious. Before delving into this problem, let us start with two charts.

The charts

Please click here for the weekly chart of S&P 500 ETF SPY. 

Please click here for the very short-term chart of Nasdaq 100 futures NQZ7.

Please note the following:

• The long-term trend, as shown by the trend line, is intact but extended. Extended trends are vulnerable and pose more risk.

• There is no significant change in volume at this time. A significant change in volume can often indicate a change in the trend.

• RSI (relative strength index) is overbought. This indicates that the market is vulnerable to a short-term correction.

The very short-term chart of Nasdaq 100 futures is important because it is used by speculators as a proxy for a group of popular tech stocks such as Nvidia NVDA,  Apple AAPL,  and Google GOOG,  GOOGL. The advantage of using futures is that they provide significant data for pre-market and after-market trading. Somewhat similar conclusions can be reached from charts of popular broad-based ETFs such as S&P 500 ETF, Nasdaq 100 ETF QQQ,  small-cap ETF IWM, and DJIA ETF DIA, which represents the Dow Jones Industrial Average.

For the sake of full transparency, this is the same Nasdaq 100 futures NQZ7, chart, without any changes, that has been published previously. …Read more at MarketWatch

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