Just a quick note showing that despite the market chugging higher, the technicals show the new highs are weaker than the previous since now the 30min and 60min divergences are now traveling over to the 120min charts. And all it will take is a nice decline and close on a 4hr bar and the divergences will travel to the 4hr charts as well.
The 2hr stochastics are showing a bearish divergence and are squiggling and getting pinched in the upper right corner as they are trying to cross down. This is all of course bearish overall, but it is uncertain when price will ultimately fail and start its decline.
Also notice above the 2hr MACD on the Dow shows a squeeze occurring at the zero line. The indicator suggests a breakout coming so you'd expect to see a triangle or sideways movement but instead price is diverging and making new highs. Again a sign of weakness. Also notice that we had a similar "squeeze" on the MACD histogram (blue/red bars in the middle) back in early August and price too was grinding higher before forming a major top. With the MACD above the zero line and an overextended rally on our hands, this chart suggests the breakout will be to the downside. These divergences are measured with momentum indicators, so they just show a weakening of momentum, but don't hint as to the good timing of a reversal. But with the VIX stock market sell signal execution now in its 5th trading day, time is running out for the bulls in my view.
While we're waiting for a top, for those of you who haven't done so already, consider checking out EWI's free Ultimate Technical Analysis Handbook while it lasts. Good free resources should always be taken advantage of in my view so I'm going to keep pounding this home until the offer expires.
I always get emails from folks who are trying to learn EWP. I think the best way is to first follow real time analysis from any reliable source you can find, like this blog :-) and try to pick up the basics in real time. I also recommend dipping your feet into EWI's free tutorial on EWP, and use it as a constant reference.
PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.