Market opinion

The market may have topped or is very close to a top for the following reasons / facts:

• AAII/Retail investors' bullish sentiment is at highest level since Jan 2007
• Spread between QQQQ or Nasdaq 100 and VXN is at highest levels in 4 years
• DJIA and S&P 500 has almost reached the price target of reverse head & shoulder formed during summer correction, while NASDAQ has already reached the price target
• High yield funds are turning negative significantly on Friday for the first time in about 4 months.  Junk bonds and high yield bonds have broke down the up trend from mid-May to early November.
• Bond fund (Pimco Total Return Fund) is breaking down the 20 month up trend since March 2009 (not quite sure what's the implication of this to equity market)
• Euro/Yen is at turned down at upper end of downward channel at around 1.15 and is now heading down (see chart below)

I would put extra focus on currencies in the next week.  On my radar screen: QID, QLD puts, VXX calls, BIDU puts