Click on Chart to Enlarge This chart of SPY is a 90 minute chart. It shows a significant bearish divergence on this time frame as the market has pushed above last week's highs.
Click on Chart to Enlarge This chart is the daily chart of SPY. It shows a very nice (basically picture perfect at this point) bearish divergence on this time frame. In addition the weekly chart shows a MACD bearish divergence with the April highs at this point. So there are multiple time frames suggesting a pullback from here.
The daily chart RSI also touched overbought today suggesting we may see things pullback from here. Now generally around the Holidays volume tails off and prices tend to trend up. So maybe now isn't the perfect time for a pullback, but the stage is set.
If we see a classic reversal candlestick, then that could be a confirmation of topping action.
Click on Chart to EnlargeThis is probably the most important thing to watch right now. The QQQQ (Nasdaq 100) is 17 cents from matching the 2007 high. Ideally before any significant decline we should see it break above that high at least briefly. This could create a double top situation. On the other hand, if the market continues up after exceeding that high, then that would be a typical bullish signal. I will update if/when we break the highs to gauge the legitimacy of the breakout.
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