Momo Boys, Altitude Jockeys, And The Biggest Inflow On Record

This is starting to get weird.

Dow Theory newsletter writer Richard Russell was just quoted as saying "Look out above" in a Marketwatch story.

The market calm before a potential third-phase bull blowout

Sounds like he and Tepper think it's going to be just like the fun part of 1999.

If so, investors have gotten remarkably prescient, because "they just poured $36.5 billion into stock funds last week, the biggest inflow on record, according to Thomson Reuters," via Marketwatch.

The biggest inflow on record.

Momo Boys, Altitude Jockeys, and New High worshippers may want to study this chart in between drinks over the next several days while making New Year's resolutions.

Source: Investmenttools.com

This is the S&P 500 divided by Vix (Volatility Index) Ratio. If there is a better refutation of the rampant uncontradicted bull dope out there, I haven't seen it.

Generally it's best to be a buyer in the green area. Generally it's best to be a seller in the yellow areas. When you get into the red areas, trouble may come knocking so it's best to take profits and lighten up. If you choose to go all in at such times, make sure you have a strategy for getting all out.

The point is: for those that think, perennially, that new highs are bullish, they are, except when everyone else is bullish.

Everyone else is bullish now.

As measured by Investors Intelligence Advisory Survey, investors are the most bullish since 1987 -- 27 years. The percentage of bears is just 13.3.

Furthermore, at the lows in 2008 the ratio of bulls to bears was 0.41 to 1. Now bulls outnumber bears by 4 to 1.

Also, notice that new breakout highs in 1995 led to a ripping bull market because investors were bearish.

Currently on the above chart, there is a negative divergence building up. While not yet as extreme as 2007, in conjunction with the IIAS figures, it should be watched closely.

With a staggering confluence of Fib levels above the market, the ride may well continue. Below 2038 could be seen as the first indication that things are about to get interesting. 1972.56 should not be messed with or else a larger pattern is in play.