Stock Indices Rally On Very Weak Internals

While I am not ready to pronounce my bearish analysis dead, the continuation of price development in the SPY is testing my patience. The NASDAQ is lagging, along with the Russell, but the Industrials and Transports have both broken out from a short-term consolidation. The breakout moves are on declining volume, more down volume than up volume and, in today’s case, negative breadth. This leads me to still have a slight bias to the downside, but that could dwindle should the Indices move higher and the internals begin to strengthen, not weaken.

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