We almost had an honest-to-god pullback today, but a late rally put us back in positive territory, once again wiping out any possibility of distribution. We had a very strange divergence between the SPX, Nasdaq, and Dow, although earnings results were primarily responsible for that (DOW component IBM, MSFT, and INTC up big, non-Dow components AAPL and GOOG down). Today's move certainly puts a bullish spin going into the weekend, but now we have to deal with overbought conditions. However, with no distribution days in sight, any pullback should be quite under control here.
Here is the weekly chart, showing that we are firmly in the upper half of the upper half of the trafding range we have been in for over a year. We have a possibility of retesting the old high at 1370, but probably not before a significant pullback. Whether than comes this month or not is now looking doubtful, but it will come at some point.
The Nasdaq also fits in well in the trading range, and looks to be about in the same position. By stochastics it looks slightly weakjer, but it is catching up.
The Dow does not fit quite as well, but it is pretty close. It is also closest to the old high, and will very likely test it as early as next week. The only fly in the ointment here is a flattening stochastics, but with this week's candle that will likely change.
The transports' stochastics have not only flattened out, but are threatening to turn down. This will probably be the first index to top out and reverse if the market starts faltering here.
The Russell 2000 is still way behind, but shows no signs of weakening yet. If this starts showing some strength the market rally will last a lot longer than I expected, and we will most likely be ;looking at new highs. If it keeps lagging, the rally won't last much longer and we will probably start heading down again, but, again, with no distribution in sight, it won't happen anytime soon.
I will have the new highs update shortly.
