Rally Needs a Rest

While we find ourselves nearing the end of earnings season and right in the middle of the end of the month buying window, trading conditions are very poor. Stocks and indices alike are extended and need to pull back and regroup. This month’s buying window may merely prop up indices rather than push them higher. Stocks are still breaking out, but with little conviction. Volume levels are drying up and the put/call ratio shows that bulls are overly eager, which means they are likely to feel some pain near term.