The Nasdaq's run, and potential end: The Nasdaq Composite has managed to put together a rare run of momentum over the past 1, 3, and 6 months. Its triple-time-frame gains have only two precedents. When both of those finally fell to a new 10-day low, the momentum bubble had been pricked.

Risk is wrong as dumb money is right: Over the past 2 months, our Risk Level has been high, and stocks have soared despite it. That has pushed the Brier Score to a near-record level. At the same time, highly confident "dumb" money has been exactly right. Historically, they don't get to be so right for much longer.

Warning sign: For the first time in months, there were more stocks falling to 52-week lows than rising to 52-week highs on the Nasdaq on Thursday. Because this comes so soon after the Nasdaq was at a new high, it triggered a Titanic Syndrome warning. A single signal isn't much of a worry - the Backtest Engine shows an average return of -0.5% for the Composite in the month following the 276 signals since 1986. It's more worrying when there is a cluster of signals across exchanges like there was in February.

Bottom Line:

• Weight of the evidence has been suggesting flat/lower stock prices short- to medium-term, so we'll have to see how Thursday's carnage sorts out; still suggesting higher prices long-term
• Indicators were showing high optimism, with Dumb Money Confidence above 80% and evidence of skyrocketing speculation while the market environment is turning more neutral - typically a bad combination, though so far the risky conditions have failed to lead to any weakness
• Active Studies show a heavy positive skew over the medium- to long-term; breadth thrusts, recoveries, and trend changes have an almost unblemished record at preceding higher prices over a 6-12 month time frame
• Signs of extremely skewed preference for tech stocks neared exhaustion by late June, especially relative to industrials and financials (here and here)
• Indicators and studies for other markets are showing less consistent forward results, though it's not a great sign for Treasuries that hedgers are net short and optimism on metals recently became extreme with concerning 100-day analogs, with "perfect" breadth among miners recently dipping a bit.