If we needed some evidence that this rally ain't quite done, we got some today. A big, big drop at the open was promptly reversed and the market finished positive on the day, with a slight increase in volume. That puts us back into overbought status on RSI, which so far means very little. CMF is also starting to rise again, and we may be seeing some, but probably not much, of the big money starting to buy again. It looks like the 2011 high is going to be challenged.
The 2011 high is now a distant memory on the Nasdaq, and this sure looks like it is headed for a challenge of 3000. Price relative has paused here, not necessarily a cause for concern as CMF has begun to rise again, but i would be concerned if price relative started dropping in earnest.
The Dow industrials is a good example of a price relative line dropping in earnest, and in this case that is bullish. This may be up against resistance here, but it really is of no consequence: this index is not calling the shots in this rally.
The Russell 2000 is also hitting resistance, and this one is quite a bit more convincing. It is also developing a down trend in price relative, and if that continues, put a fork in this rally. Notice how the price relative line went up during early January, which gave the market plenty of juice for a big rally. Unless it starts rising again, we are probably headed for some weakness.
This rally, which has at times looked like it was about over, refuses to quit, which means it probably won't. That means the big money boys will be selling into strength, and I will be watching for signs of that. Until we see it, it's bull party time.
I will have the new highs update shortly.
