U.S. Stock Market Top! Finally!!

Just a quick note tonight about the U.S. stock market:

While most major benchmark indices closed up on the day today, the intra-day action looked to me like a genuine exhaustion pattern where prices gapped higher (again), posted all-time record highs in the morning (again), and then faltered notably in afternoon dealings.

After three straight interest rate cuts from the Federal Reserve this year, and lots of monetary stimulus over the last 8 weeks in the form of massive repurchase agreements and another round of quantitative easing, stock market investors should not expect any additional bullish support from this key contributor. A potential 4th interest rate hike from the Fed in December has almost been completely ruled out in the Fed Funds futures market, and even a potential January 2020 interest rate cut now faces low odds.

While almost no one expects a repeat of last year's 4th quarter collapse in the U.S. stock market (which clipped 20% from most major indices), I now see a fairly swift 10% correction over the very near term.

Here are two very interesting charts which show how extended most major U.S. stock market indexes are right now:

Nasdaq-100 Index (QQQ) Weekly Chart with 200-Week Moving Average and 3D Bollinger Band

S&P 100 Index (OEX) Weekly Chart with 200-Week Moving Average and 3D Bollinger Band