In last weekend’s Briefing I discussed the divergences between price and the internals in the Stock Indices. That condition suggested a higher probability of some type of move lower, unless the internals strengthened. Price, in fact, did move higher each day this week and market breadth almost eliminated its divergence in the NYSE, but not so in the NASDAQ. Additionally, the other internal components continued to weaken. More concerning is the way price pushed higher and volume continued to fall off. New highs are not increasing.
All of the above leads me to be very cautious going into the next week with long positions. I have found in the past, the internals have a higher probability of predicting a turn than price. I will change my opinion of the current rally, if and when the internals support it. Until then, the risk remains to the downside.