After observing the 15min. S&P futures charts I see a severe divergence already building into the rally From late Friday into today. Observe the above 3 charts which have various momentum indicators on them. Notice that on all 3, the price of the S&P futures rises (see ascending blue line) yet the momentum indicators fall (see descending blue line). Most importantly, the RSI indicator (red) is showing a severe bearish divergence as well. Often times when a rally or selloff moves very far very fast, divergence occurs and therefore calls for a healthy correction before perhaps continuing. This severe bearish divergence on all 3 momentum indicators, especially the RSI, tells me we are in for a very strong correction soon.
This does not change the fact that a multi-week bottom is probably in and a major rally phase is underway. All it means is that this severe weakness can be used to close existing short positions and/or establish long positions. But these charts tell me a big selloff, whether it be a correction or a continuation of trend, is coming soon.
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