Sometimes there is too much hope.

I am starting to get more reader mail telling me about call option purchases, which scares me. I think this is the time to close your put-write trades, in fact.

One look at the Dow and Nasdaq Daily data charts, as follows, shows that the technical indicators I follow are reflecting a short-term top. I have been writing that a short-term cycle pullback could easily extend into mid-term and (possibly) long-term cycle declines.

The bottom line is that I would not be inclined to add long positions to stocks here, but rather be looking for ways to protect my recent gains.

If you look at the following Dow 30 Daily data chart, you will see that after a three-day mid-May rally, the Dow index reflects a churning market. In the absence of other factors, it is conceivable that such trading merely reflects a normal sector rotation; however, in the past month I have noted extreme hype by the popular TH's.

The Nasdaq market started its rally 12 weeks ago, and is already up +14.5 pct. Some of you think that rally can continue for another 12 weeks, and that's unfortunate because the Daily data chart technical indicators show that the rally is almost over.

Let's see; it's Wednesday. Do you think the Nasdaq will still be in rally mode a week from now?

Moreover, I don't hear TH's pointing you to the major decline in the U.S. bond market over this time. So here are the Daily and Bi-weekly data charts for the Lehman 20+ year Bond index, which trades as TLT on the NYSE.

Further declines in the bond market will begin to hurt various sectors in the equity market, such as real estate, financials, and utilities. So, caveat emptor.

So, I'll try to get back into a market mindset here because (1) I need to, for personal reasons, and (2) I think some of you need me to.

The Dow futures are strong this morning (+25), which indicates a positive open in New York. I'm wondering if the day ends as strong.