The key stock averages have broken key resistance levels, but they're also expensive and overbought at these levels.....Eventually, the fundamentals do matter.

Table Of Contents:

1)  At some point, you have to ask yourself if the market is rallying for reasons that are sustainable.

2)  That said, the recent breakout moves in the major indices have been quite impressive.

3)  When certain artificial factors subside…and inflation stabilizes…people will wake up to the fact that earnings suck.

4)  The 3.5% level on the 10yr Treasury yield has become vitally important on a technical basis.

5)  If (repeat, IF) the high yield market rolls over soon, hold onto your hats!

6)  The “momentum stocks” are no longer in the big indices.  What does it mean?

7)  The housing stocks have become quite overbought, so we’re going to avoid them right here.

8)  As we thought, China stocks & gold have pulled back.  We think they have further to fall (near-term).

9)  The SPX, NDX & RUT are far from the only overbought charts out there.

10)  Summary of our current stance.

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