Stocks Surge, but Indices Still Diverging; Euro Still in Rally Mode

The bulls came in and surged the market higher, held it up all day, then pushed to close at the highs.  Advancers well exceeded decliners both on the NYSE and the S&P as you can see above.  Up volume was bullish, but not as impressive as I though it would be for such a big up day.  And total volume was sad at not even 1 billion shares traded today.  With the Fed announcement coming later this week, perhaps we'll get some volatility and volume entering the market, but for now the bulls have flexed their muscle and will try to control this market.  We'll see if they have anything left in the tank.

As for the wave count, the S&P looks like it may have topped, and the Nasdaqs look even better in that respect.  However there is little room left for this count to remain valid, and with today's strong surge and close on the highs, it's hard to think we'll selloff first thing in the morning.  But as long as 1296.06 remains intact, the count remains on the table.  We'll see what happens tomorrow and if the bears can push back these overconfident bulls.  The Nasdaqs still have a long way to go to confirm the Dow's new highs so even if the S&P does break above 1296.06, the Nasdaqs non-confirmation of those highs is still bearish as long as it's stays in place.

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Above is a comparison of the Dow, S&P and Nasdaq 100 indices illustrating what I mentioned above.  You can see that the Dow, holding the safest stocks on the market, is well exceeding the S&P and Nasdaq 100 which hold higher risk stocks.  This is usually bearish behavior and shows a mild flight from risk that usually precedes tops.  As long as this lagging behavior remains in place, especially in the Nasdaqs, the more likely a significant top is at hand.  But as usual, these tops tend to take forever to occur.  So be patient, and stay solvent.

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The US Dollar took a hit today and the euro benefited and rallied strong again today.  The rally appears quite choppy, like an ending diagonal, but the wave count is unclear at the moment.  There are a lot of 3 wave moves all over the place which means some type of corrective behavior occuring, yet the Australian dollar vs. the US dollar is unfolding in clear EWP waves, and adhering to fibonacci retracement levels.  As long as this continues in the AUD/USD, I'll remain bearish (so bullish on the US dollar).

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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.