Market is overpricing risk (update 3) -Longs on the Dow ( US stocks), thin volume on the EUR

Yes there appears to be long positions flowing into the Dow, also the S&P500. A good sign amidst poor economic and consumer data/news? Are we looking at liquidity rallies, which can be disputable, unless you believe that the Fed is funding Wall Street to buy shares (which is true to the extend that fixed income trades are history and yields on stocks are higher) but is there a Fed sponsored PPT (Plunge Protection Team)? Which buys stocks via inflows of Fed capital to offset a downward market. I don't believe it. The 2009 stock rallies came essentially from government sourced stimulus, consumer confidence goes up up as they have tax credits/grants to buy cars/houses and shop. The market sees good numbers and buys into stocks/currencies etc. Thus creating a bubble in stocks (which we were in the middle of a correction May 2010). What we are seeing now is a hangover from the 2009 stimulus lead stock rallies. An illusionary 'feel' of sustained rallies, but while stimulus is being wound back and austerity measures in EU will start to take hold and squeeze the citizens of the Europe, hence the latest economic data refer to Market is overpricing risk (update 2) - sucker rally is indicative of this.

What I do believe has taken place is there has been some central bank intervention refer to Amazing Central bank intervention and Amazing Central bank intervention (update 1), I think this is to try and restore confidence rather than propel a super rally again like 2009. But it's a fools paradise, the market can be tricked on the short term refer to Pricing in the big one (sell) 2010 , but then realizes and sells the fuck out of everything.

Dow chart is self explanatory, large volumes and a higher OBV and MFI show money moving into US stocks:




The EUR (v's USD) which has been rallying int tandem with stock markets, appears to not have the volume of long positions (1 hr chart) that they Dow and other indices have. There is the 1.20 line drawn and I would say that if we look at European Central Bank (ECB) intervention, it will be there; if there are buying operations taking place (including EU debt buying), the 1.20 appears to be the defense line. How long can this carry on? Hard to say, the short sellers of the EUR have bought back positions and now are trading into a buy/sell spread at 1.21 and 1.23. So it's range trading with thin volumes. Classic formulation to a breakout on the downside.