Three Reasons to Distrust This Rally

If my email is any indication, Gary B. Smith at RealMoney is not alone in his view that there are reasons to distrust this rally. He bases his view on three basic reasons: 1) the Nasdaq 100 Trust (QQQ) has gone almost straight up for the past two weeks providing a "V" move up to resistance, 2) his newsletter is showing no new longs and he argues that when the market is extended and due to turn his long picks dry up, and 3) the T2108 indicator which shows the percentage of stocks above their 40 day moving average which provides a class sell signal. These are interesting points to consider. I have to give him credit - at least he didn't talk about how high oil prices are going to tank the market or how sentiment has stayed too bullish which so many (including myself) have focused on of late. Here is a copy of his T2108 chart which is available only through Worden Brothers' TC2000 software: