As discussed in the previous Briefings, the Stock Indices have now completed objectives in terms of price, extremely low volume, breadth divergences, and almost time.
Today, the S&P reached the 1955 area. They can allow for an additional 5 points or more to the upside, but it is not necessary. Volume has continued to decline and was the lowest it has been since the rally off the low began.
Breadth diverged today, suggesting a continuation of weakness, as buyers seem to be waning. The Market has reached a point of being extremely overbought with all three timeframes converging in overbought territory. This typically suggests a large move is in the offing. Finally, the Russell diverged from the S&P and NASDAQ today. The latter were able to trade above Monday’s high, while the Russell did not.
Unless there is a news event that changes the market internals, the waning strength has all of the characteristics of a countertrend rally and there should be another thrust to the downside. Tomorrow’s trading will be extremely important in its development, especially the Initial Balance Period.