In addition to all the macro and technical analysis I’ve published as of late I’d like to just add one additional key point: Caution – Markets are not a one way street. But that’s precisely what price discovery has evolved to and that opens markets to the possibility of a potential risk off event currently not expected by most participants and admittedly even viewed skeptically by this participant.

But consider the following facts:

$NDX: On year 9 of consecutive up years, indeed only one down year in the past 15 and far disconnected above the annual Bollinger band and the annual 5 EMA:

The $DJIA, up 8 quarters in a row ever since the summer of 2015 with it not having tagged the quarterly 5 EMA in now 3 quarters. This has never happened before:

The last down quarter was in the summer of 2015 and indeed it was this time when the war on risk was initiated with volatility sinking every single quarter since then leading us to this unprecedented period of low volatility:

And it’s not just the US, here’s $FAW, the $FTSE global index, up 10 months in a row, not a single down month since the US election:

No, price discovery has become a one way street. Funny in a way as central bankers are bemoaning the lack of inflation, yet in aggregate asset prices experiencing rampant inflation is self evident.

And it is precisely here, in this time, we can observe the following:

August 2017 sentiment check:
Cash allocations at 17.5 year low
Highest new retail account opens since 2000 at Schwab
And here comes E-TRADE: pic.twitter.com/hGBgJwPFUw

— Sven Henrich (@NorthmanTrader) August 2, 2017

Oh yea, it really is different this time. Price can only go up. But will it?

My views/analysis below:

But if history remains any guide, the context of price reaching these levels in such a manner does not bode well for future returns:

I say: Caution.