Warning Signs That the Market is Topping

Stocks opened lower yesterday despite the big earnings from Apple (NASDAQ: AAPL
) announced after the close on Tuesday. But after the Fed announced that it
would keep the federal funds rate at 0% to 0.25% until at least late 2014,
stocks jumped and the Dow Jones Industrial Average ran to a new multi-month
high. This was a surprise since the Fed had indicated that rates would remain
low until mid-2013. The move was obviously timed to encourage the public to sell
bonds and buy equities. Another result of the announcement was a sharp drop in
the U.S. dollar and an increase in commodity prices. At the close, the Dow was
up 81 points to 12,757, the S&P 500 gained 11 points to 1,326, and the Nasdaq
rose 32 points to 2,818. But volume on the NYSE remained low at just 833 million
shares while the Nasdaq traded 517 million. Advancers exceeded decliners on the
Big Board by more than 3-to-1 and by about 2-to-1 on the Nasdaq. Click to
Enlarge Click to Enlarge Yesterday's Fed-induced rally drove two of the
important indices to new inter-month highs. The Dow industrials rose to within
21 points or so of its top resistance line at 12,800, and the S&P 500 ran
through its resistance line at 1,320 by several points.