As unbelievable as it seems, the (SPY: 75.45 0.00%) and Nasdaq are back above their 200 day moving averages. The SPY is about 4 points away from going positive year-to-date. By any measure I am aware of, we are no longer in a bear market. Although the Dow Jones is still just beneath its 200 day average, is their any doubt that it will not soon overtake it? 

Since the bottom in March, the indexes have gone straight up, with a few pullbacks along the way. This kind of up trend is confirmed by the VIX, which is near its October lows. “Why be fearful? Just get drunk and buy stocks!” says the VIX.

The Nasdaq has put in a beautiful saucer-shaped bottom. Except for the index going straight up, for 2 months in a row, I can’t find much to be bearish about, technically. The RSI(2) is at levels that typically coincide with pullbacks, but as of yet, there is no indication that the market wants to do anything but keep going straight up.

Yet, there is still something that doesn’t feel right about the whole ordeal.

I mentioned a month or so ago that I would not be surprised to see the indexes get close to positive, suck everyone back in, and then reverse. The Nasdaq has ran up 15% since its bottom in March. MACD is not confirming the move, and we are entering a period of seasonal weakness. Today’s close on the Nasdaq and SPY put both indexes above the upper Bollinger Band. For these reasons, I’m expecting another quick pullback, in the short term. Longer term, my guess is that the indexes will not get very far into positive territory for the year before experiencing a significant pullback of 5-10%.