Nothing Is New!

The market continues to climb higher as many market participants continue to ponder on when it will rollover and experience a sizeable correction to remove the excess. Many have put forth technical corollaries to point out the similarities from the past and the consequences it might hold. Numerous price derivative indicators highlighting excessive overbought have been published to support the cries for a correction from these market participants.

Back In Sync

Yesterday I warned about the negative divergence that the market has been displaying for the last couple of trading sessions, and this negative divergence needs to be resolved or another extended pullback such as the one we have experienced from May 19, 2015 to February 11, 2016 could appear.

Caution!

The market has been holding on to a negative divergence in the last couple trading sessions. Today, the market sent a non-confirmed recovery high with negative breadth message to warn of potential change in direction. Until this divergence has dissipated, be very cautious on overly extended toward the long side. If this negative divergence does not get resolved soon, be prepared for a possible extended downward move. Last time the market sent out this similar message was on May 19, 2015, and the Dow Jones Industrial did not see a higher high since and only on February 11, 2016 when the Dow Jones Industrial put in a non-confirmed low to start this recent rally. Will today’s message result in a similar outcome as the May 19, 2015? We just have to wait and see.

Just a reminder, tomorrow the FOMC will announce its latest decision on interest rate, and Chairwoman Yellen will hold a press conference after the FOMC meeting. Beware of potential increase in volatility!

Coming Through

The market is coming through the level we've been monitoring, the September 2015 FOMC pivot high. Last week, market did a minor pullback after five consecutive up days and then it resumed it's upward move toward weekly OpEx. Next week, FOMC will hold its March meeting and the anticipation is there will not be another rate hike in March. As the meeting approaches, the market could experience an increase in volatility. Therefore, one should remain cautious and do not attempt to trade in front of the FED as anything can happen. Always expect the unexpected.

Time For A Pause

The market has been up for four consecutive day and it could be time for a pause before it continues to move higher.

In this video, a review of the market’s price action along with these momo stocks: AAPL, FB, NFLX, TWTR, AMZN, GOOGL, TSLA, and the crude oil, gold, long term treasuries and the US dollar futures.

Resolved

Today’s rally has resolved the concerns that I have expressed in the post "Likely To Go Higher". The divergence between the DJ Industrial and the DJ Transportation has been rectified and the Dow Theory non-confirmed low remains to be valid. More importantly, the breadth indicator that did not provide the confirmation came through with a validation that the current upward move is supported by market breadth.

Here are the updated charts for DJI, DJT and SPX. The levels below the price are potential supports and levels above the price are potential resistance/target.