Ryan Detrick is the Senior Technical Strategist at Schaeffer's Investment Research. He has the uncanny ability to connect the dots in a market that seldom makes sense.
So we’re up a lot and lot’s of people are bullish. This is a fact. Still, I think there are signs this bull market is far from over and very well can continue well into the first-quarter of next year, until we finally get a meaningful pullback.
One of our favorite indicators to measure potential buying pressure is short interest. A lot of shorts represents potential buying pressure, as those bearish shorts will be forced to buy back their bearish bets in a bull market. Well, check out the overall short interest on SPX components.
It is up near the highest it has been since June 2012. That sparked a major low in the SPX and a huge rally, probably fueled in part by the shorts covering. Now we are back up there. This is a good sign for the bulls.
Turning to the QQQ, it has had a huge year – up more than 30%. Well, short interest on QQQ components was up 2.3% last period and is actually at it’s highest point since August 2009! That is a huge pile of firewood for a big fire, we just need the match.