DVY and SDY Weekly Charts Upward-Sloping Channels Dividend Stock Bubble Peaking Potential M Top

One of the results of the Fed's money-printing and endless QE is a big rush into dividend stocks over the last 4 1/2 years. SDY and DVY are two dividend ETF's. Their charts are identical. The SDY chart shows the bottom at 23 (green circle) after the 2008-2009 crash. Dividend stocks have now obscenely tripled in less than five years. SDY runs from 23 to 71, +210%. On the DVY chart, the May top occurs due to negative divergence, a rising wedge and overbot conditions but the RSI was very strong and wanted to see another higher high in the future. Price is now at elevated levels once again, at the top rail of the pink channel, and negative divergence exists across all indicators. There is a touch of short-term momo in the RSI so the bulls may be able to stretch things out one or three weeks but the move is very long in the tooth. A down leg would create an M top, or double-top. Volume is very low and unimpressive over the last couple weeks as price makes new all-time highs.

The Fed took some air out of the balloon in May with the talk of taper, but then walked back the taper talk, sending Fed members out in force to pump the QE easy money talk in June to create a near term bottom, and now another move to higher highs. The Fed must have decided that a many month sell off in stocks is unacceptable since it ruins the wealth effect idea that Chairman Bernanke is implementing. So the Fed, BOJ and other central bankers are creating big asset bubbles again and the dividend stock bubble is at the top of the list. The Fed has only one tool to use, QE, and their hope is that enough time will continue to pass that the economy can recover and generate jobs and become self-supporting again. Good luck with that. Projection is for the dividend stock bubble to pop at anytime forward and dividend stocks to move sideways to sideways lower for the weeks and months ahead. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.