McClellan Oscillator Still Diverging

The action over the last few days has been interesting.  On Monday the S&P 500 and NYSE hit new all time highs and yet the McClellan oscillator closed below 0 as the SPY formed a bearish engulfing pattern on a slight break above resistance.

There seem to be only 2 sensible scenario here:

1. The market is topping and will make a significant decline after the chopping such in the last weak handed buyers.
2. The market is going through a consolidation/rotation with an upward bias - basically a contracting triangle with an upward tilt.  This would logically imply a strong upwards post triangular thrust.

Real money sentiment is still running pretty complacent compared to the data set for the entire bull market since 2009.  I will update as we get an further significant action.

Pete