There are a few items that we do need to address. First is volume. We have not seen large volume plays with the Dow ... I would like to see some large volume accumulation days. Note the volume chart above has been declining since early May.
Second is the Dollar. If this turns we may very well see a top in the Dow. All indicators are pointing to a bottoming.
Last is the Corporate High Yielding Bonds. This chart has performed in movement with the Equity Markets for the last year. It now looks to be topping ... Money Flow (blue line), Frye Indicator (green line) and all the other short term indicators at the bottom of the chart.
I would like to point out ... this doesn't really mean a thing ... price is going to be the final determinate of the direction. Indicators are built to measure a cycle and can stay overbought or oversold for a period and just because an indicator has moved to an extreme doesn't mean that price will follow ... it is just a guide.
We may see price back off a little in equities but I think we still may have some more room to move up. Watch out when gas, interest rates, taxes and unemployment move higher or remain at high levels ... this will be a lethal combination for equities ... make no mistake about it.
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