Further Signs of Stocks and Commodities Topping

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The chart above is QQQQ which is the Nasdaq 100 ETF. Yesterday it formed a bearish engulfing pattern. It is overbought in both price and time. Also it is at a harmonic retracement level and projection level, so this is a nice resistance area to see a reversal in the markets. Keep in mind that the 2007 high in QQQQ was 55.08. If QQQQ remains above there, that is bullish, but a failure to hold that level may be longer term bearish.

There are a bunch of other non-confirming intermarket relationships here. Bonds have not made new lows the last couple weeks as stocks have been making highs. The US Dollar index is well off its fall low and is not confirming stocks at these levels. Gold and silver have both begun to break down after not confirming new highs in stocks over the last month. Silver should fall a lot if there is a top forming here. Commodities are overbought across the board.

On a separate note I have noticed some foreign market ETF's setting up bearish Gartley topping patterns (EWH, EWQ).

Both stocks and commodities I believe are likely to see substantial give backs over the intermediate to longer term. This bull market has been unusual in that after a major decline in stocks and commodities there was never a retest of the bear market lows. Each market is unique, but in every other major bear market, stocks did retest the low. So precedent would argue for some significant return to deflationary psychology before a possibly more sustained bull market.