I have wanted to start a journal here in ET for a while now and I guess now is a good time as any. Also, I hope to stop polluting others' threads and keep my thoughts about the market here. If you are going to contribute to the thread I would only ask that you keep it very, very relevant. Other than that you are most welcome to make me eat crow (please serve with a side of fries). The journal will be a bit different from others in a few ways. I'm mainly interested in the general tone of the market, rather than say a specific subsector or a specific security. As Jesse Livermore says, most stocks follow the major indices. So I will be looking for big swings and try to profit from them by entering at inflection points when I identify them. I may use options, stocks, SSF, futures, etc. depending on the level of conviction and time window I see. Another way that this journal will probably be different is that I may not be updating it frequently (daily or intra-day) since the nature of my strategy is to go for longer swings and ignore hourly or daily swings. But you are welcome to post if you have something to add or think I am wrong or whatever. I just ask that you keep it relevant. My main tools for doing this analysis are the usual suspects. Technical analysis, market internals, sentiment, fund flows, and some pixie dust. To be honest, I prefer the more esoteric tools, although the tried and tested oldies are not ignored. So lets take a look at right now and go down the list of why I think we are in a topping stage (as expressed repeatedly in other threads): Sentiment AAII -- most recent is 63% bullish (nuff said) II -- bullish but not extremely so Hulbert's newsletter metrics -- extremely bullish JJC if onboard -- generally a good guy to fade According to Richard Bernstein Wall Street 'strategist' recommend a 65.7% stock allocation (not a typo) Very low cash levels for mutual funds Technicals Dow has not confirmed Transports by surpassing recent high Sideways and listless trading Gold in secular bull & again entered a cyclical bull (mid March) (for more on gold do a search for "Babak" and "gold") The VIX and its cousin VXN are screaming overbought ATR of major indices is very low -- a sign of a top Internals Nasdaq/NYSE high/low metrics are screaming overbought Nasdaq/NYSE stocks over long term MA -- ditto McClellan Summation for both -- ditto Nasdaq/NYSE adv/dec -- ditto Fund Flows TrimTabs/AMG report significant pick up in mutual fund inflows VERDICT: SELL So how do I suggest one play it? There are many ways. A simple one is to short ETFs like SMH, QQQ, DIA or SPY and just hold for the ride. Another that I'm fond of is to search out specific stocks which look toppy, that is they are close to previous resistance thereby offering a low risk short entry. Another is to look for a whole sector which is getting toppy (hint: transports) I've been making my list this past week and will be going through it with a fine tooth comb to finalize it. Well...that's it. For now.