Negative divergence for equities grows in technical and sentiment indicators as dollar drops close to target

Negative divergence for equities grew as the McClellan Oscillator back-tested resistance with a lower high (see charts below). It didn't drop from overbought yet but will very soon. What happens after that will reveal a lot about whether or not the bear-market rally is completed. Meantime, one of my wish list items for such a top might be showing up - as the Dow made a new high, but the VIX made a higher low. At the same time, the dollar edged closer to my 74.75 target, so it's closer to a potential turnaround too. Finally, while the TRIN's 10-day moving average is above 0.80, it's well below 1.20 (at 1.09) and it closed around 0.28 - that's pretty darn low and warns the market is short-term overbought!

This is just a technical wrap, aside from cycles and so forth. But just intended to show some of the reasons why we remain wary that the market is closer to a "sell" than a "buy". I know it's tempting to think in terms of people pushing the markets around, and guess what - sure, there are some who do try to keep the markets up, it's not a big secret; but the point on the other side is that "they" cannot prevent cycles or downswings. When buying power runs out of steam, it cannot propel prices higher. That's why everyone and their cousin now realized there's a dollar carry trade (since the yen carry trade gave out) correlated with equities pushing higher. It works until it doesn't. My guess is that it'll stop working pretty soon. So, let's remain wary. After all there remain reasons to expect some volatility the next couple of days, even if we don't know yet just how much.