Peter Way, editor of Block Traders ETF Monitor, says an analysis of positions taken by big trading desks raises warning flags about the bull market's ability to keep going.

Since late March investors have increased their total commitment to exchange traded funds by another $8.25 billion, or by 2.2%. That percentage gain is twice the increase in price of the Standard & Poor's 500 index in the same time period.

Of particular interest is where those ETF gains have been achieved, and where they have not. The biggest gainers have been in the international and global sector, while the least recovery has been in the broad-based [US] market sector. That latter group has seen the largest commitment of funds in the past, and continues to hold nearly 40% of the $382 billion in the most active names we monitor.

But it grew only by 0.2 % in this most recent period, compared to the global sector's 5%. That [global] group now makes up 25% of ETF commitments and is challenging the dominance of the broad-based group. The perceptions of the volume market-makers seem to be reflected in that trend.

The strong suggestion here is that new general investments in US equity markets may not be a great idea. Not too surprising, with those markets near record levels. The alternatives appear to be either look abroad or find narrow niches that can withstand or benefit from a weak general market.

The reward: risk tradeoff for international ETFs isn't a lot more encouraging than that for broad-based ETFs. The flight of investment money into those alternatives appears already to have chased their present prices up to pretty full levels.

That leads us to the industry/sector group of ETFs. Interestingly, energy stocks are the only area that the million-dollar market-makers currently find of much appeal there.

The widespread lack of appeal to the pros for stocks at current prices should be a strong warning sign. So should the number of industry and sector ETFs that actually have negative prospects. This says the "prop" desks (proprietary trading activities) of the major Street firms are actually willing to take negative bets in these areas.

It's no fun to report bad news. But when markets are churning to new highs the enthusiasm often runs to excess. This may be a time when it is not wise to reach for that last ?% of gain.

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