Yesterday’s small further rally in stocks was enough to cause daily-scale top extensions in the S&P, one of the Japanese indices we follow and the basic material, oil& gas and aerospace sectors (not shown here):
This has the usual meaning – the rally is on shaky ground and will have trouble making further headway for up to three weeks. It may also mean that another dip is due, so watch for signs that you should be selling short. These will include some local divergences between the major indices (as is happening today so far as the Nasdaq is far weaker than the others) and other signs of rally failure.
All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com
