The market hasn’t paused for so much as a breather since late March, an amazing feat considering how overbought it’s been. Friday’s reversals were negated in today’s powerful reversal, but once again we feel compelled to point out the warning signs, beginning with a very low equity put-call ratio today. Add to that the continuing saga of the persistently weak upside volume on the Nasdaq, and new highs that have been cut in half on that index, and you have a market that appears ripe for a correction, if sellers ever decide to reappear. Price action, however, remains undeniably bullish, and buying breakouts and dips has been rewarded. The rally has become much more of a blue-chip affair in recent days. The Dow (first chart below) is sitting right at the upper trendline of its rising channel. If it can clear that tomorrow, 9473, the 50% retracement of the index’s all-time high, could be next. 9250 is now support. The S&P (second chart) would hit its upper channel line at about 1020-1025 tomorrow. 1000 and 988 are support. The Nasdaq (third chart) has resistance at 1684 and 1719, and 1650 and 1620 are support.
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