Market Internals Signal A Possible Warning

As of Friday’s close, the Stock Indices are flashing warning signs. The market internals are continuing to weaken. Volume is very concerning. It is difficult for price to continue higher when the number of buyers are dwindling. Additionally, there are now other internal divergences, as some of the Indices tested resistance levels. Finally, there is a non-confirmation between the Industrials and the Transports.

The Transports have consolidated for the last two days, but appear to be ready to break to the downside of that rotation. Unless today’s high (resistance) is traded through and volume and breadth begin to increase, the risk is to the downside.

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