Midweek Update

As promised in this morning’s post, a couple of charts I have been watching:

(click on charts to enlarge)

The charts of the S&P 500 and the NASDAQ 100 are showing a little bit of divergence: where Tuesday’s action saw the SPX move to new highs, the NDX did not, and is looking toppy. Add in the heavy selling in key tech stocks (see charts of MSFT, CTXS, EQIX, INAP), and the ongoing distribution in Apple shares that I have been noting, and we see that there is another picture developing beneath the cheery stock headlines.

There is plenty of action beyond stocks, with the currency wars (global worry du jour) well under way Fed easing thought to be all but assured. This is producing a situation in the markets where, as Dave Fry put it, “it’s strange to see bonds and gold going parabolic at the same time.”

What we have here is a dangerous market that is advancing, but isn’t acting right. In particular, we should be keeping an eye out for more telling divergences.

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