Stock Indices Show Divergences And Weak Internals

The Stock Indices, except for the Industrials and Transports, are all testing all-time highs. The Industrials are lagging slightly and the Transports are in a downtrend. The NASDAQ wants to drag the S&P higher, and the Russell is following. However, if you look internally into the rally off the June 18 low, you will see a very weak structure. While that can change, it is a warning signal. The Intermarket divergences add to that warning. We must respect the trend since the recent low, but certainly, approach next week with some caution. Watch for short-term support levels to be taken out. That will be the first confirmation of a possible correction.

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