Last week I mentioned that there were numerous divergences present on the charts of major stock indices. It now seems that these bearish divergences are working out. For the week $SPX lost a little over 1% to close at 2065.30. Stocks are somewhat oversold on the short-term basis, so a snap-back rally would not surprise me at this point. 
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Signs of selling appeared on Wednesday and continued into Friday. SPY gained about ½ of percent to end the week at 208.97. This rally that started in February has probably overstayed its welcome and profit taking is likely to commence. Profit taking implies some sort of a corrective action. Whether or not this coming correction is going to turn into a rout remains to be seen.  Read the rest of this post here

Another tough week for the bears. Stocks gapped-up on Wednesday above the recent highs. SPY hit the high for the move on Thursday, and touched a major resistance in the 208-209 area. Bulls, especially those that bought back in February, are probably feeling very good right now since they are sitting on an about 15% gain. Could we gap above this resistance and simply make another all-time high? 
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         Big news of the week was a possible Rising Wedge break on the chart of S&P 500 ETF SPY. I still say “possible” because Mr. Market has a way to make the life hard for pretty much every participant out there. Maybe the wedge is broken and we now collapse back down to February lows. Maybe the opposite will happen and we will punch through resistance and make all-time highs. Or maybe something completely different will happen and we will meander sideways for month on end. Read the rest of this post here

Stocks (SPY) were able to close all gaps remaining close to the all-time highs. No gaps for SPY remain above the current levels. We have to give credit where credit is due: this 15% rally off the 52-week lows was indeed impressive. Having said this, I still think that this rally is a counter-trend one. My long-term model (MBI) has flipped into the bear mode as early as September of last year and is yet to even begin improving. 
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