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This has been a wild and wooly couple of market weeks. First, the Fed held pat on interest rates. But after badgering Jerome Powell with the same question asked in myriad ways, he eventually caved and essentially told listeners what they wanted to hear. The markets exploded. But my thought is that a topping process is underway, advises Kelley Wright, editor of IQ Trends.

Indeed, when the employment report came out, the narrative changed so quick it likely made your head spin. The trap door to the downside opened up. That was facilitated by news from the Bank of Japan and the realization that the yen carry trade was coming to an end.

Now, we’re back on the Fed easing bandwagon, the BOJ folded like a cheap suit and recanted their change in their monetary policy, and all is magically well again.

S&P 500 ETF Trust (SPY)

There has been a lot written and said about bull markets ending with a bang or a whimper. A study of market history reveals that typically the completion of a trend is a process, a series of fits and starts that takes investors one way, then the next.

The market is in the business of performing a "wallet-ectomy" on as many as possible, as often as possible. Accordingly, this procedure is rarely tidy and neat. Bob Farrell, the technical strategist legend at Mother Merrill, states that, “Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.”

My thought is that the topping process is underway, and the reaction to the employment report and the change of policy by the BOJ is just the first salvo. It reveals that sentiment is capable of turning on a dime.

However, do not assume the major indices have made their all-time highs. On a technical analysis basis, I am actually expecting them to take out their previous high-water marks. After that, we’ll have to see. Whenever the top is finally in, however, I suspect it will be a big bang.

About the Author

Kelley Wright entered the financial services industry in 1984 as a stock broker, first with a private investment boutique in La Jolla, and later with Dean Witter Reynolds. In 1990, he left the retail side of the industry for private portfolio management. In 2002, Mr. Wright succeeded Geraldine Weiss as the managing editor of the Investment Quality Trends newsletter as well as the chief investment officer and portfolio manager for IQ Trends Private Client.

His commentaries have been published in Barron's, Forbes, BusinessWeek, Dow Jones MarketWatch, The Economist, and many other business and financial periodicals. Mr. Wright is an active speaker at trade shows and investment conferences, and is a frequent guest and contributor to radio and CNBC. He is the author of Dividends Still Don't Lie, which was published in February, 2010, by John Wiley & Sons, Inc.

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