A few signals of a stock market top are flashing, according to longtime trader Stan Weinstein. In his weekly Global Trend Alert report for hedge funds, Weinstein noted he’s seen several that stocks may have reached their peak and may be in trouble. “The market gives us ‘hints’ as it’s making a top,” he wrote. One of those hints is the “deceptive new high” the S & P 500 reached in late October. The benchmark index hit an intraday top of 6,920.34 on Oct. 29. However, Weinstein called this “one of the worst new highs that we’ve seen in our many years of market analysis.” He pointed out that while the index hit a record, it “it occurred in conjunction with horrid Advance-Decline figures.” In other words, the number of declining stocks was well above those that advanced. Two other hints include his S & P and Secondary proprietary surveys not reaching a “clearly bullish” ahead of the October peak, and the fact that “for the past four weeks, there have been more sell recommendations than buys in our weekly updates, as well as more unfavorably-rated than favorably-rated groups.” Indeed, the S & P 500 is more than 4% below its all-time high and is coming off its worst weekly performance since the week ended Oct.10. This comes as investor expectations of a Federal Reserve rate cut in December fluctuated, while traders remained skeptical about valuations within artificial intelligence stocks. “We want to once again stress that what is taking place isn’t, as so many others think, just simply a ‘normal correction’ – and, we, therefore, still see the need for extreme caution,” Weinstein wrote. That may be especially true this week, as the market will be closed Thursday for the Thanksgiving holiday. Trading volumes are usually lower on holiday-shortened weeks, meaning stocks could see more sudden, volatile moves.
