As equity markets continue to ‘climb the wall of worry’ and with so many market commentators predicting the imminent collapse of the current bull run, this may be a good time to take a more dispassionate view based on the two leading technical indicators traders and investors have, namely volume and price.

For the purposes of this exercise I am going to focus on the weekly chart for the NQ which is generally considered to be a barometer of market sentiment, as economies move through their classic cycles of expansion and contraction.

Since 2009 the NQ (along with other equity indices) has been in an extended phase of bullish momentum, punctuated by minor corrections and reversals which is typical of any established trend. The most recent of these was during March and early April of this year which culminated with sustained buying and a solid recovery from the 3400 level back to the 3700 price region which is where the index is currently trading.

However, what is interesting to note is that over the last three weeks as the index recovered with three weeks of up candles this was associated with falling volume, so clearly we can expect to see a short term reversal possibly both this week and next. In other words, another correction. What is clearly lacking from this chart, and indeed in many others is any strong signal of a selling climax, either at the current level or at the level posted earlier in the year. In addition, there is a strong platform of support now in place between 3500 and 3600 as shown by the volume at price histogram to the left of the chart.

In summary, there is nothing at present to suggest that the current price action is other than a pause point in an otherwise longer term rally higher, and we must simply be patient for signs of the selling climax which will clearly signal the start of the reversal so many have been predicting. But it’s not there yet, and the big brown bears will have to remain patient for the time being! In many ways, this is similar to the demise of the euro – shades of Mark Twain here I think!