The thing with divergences is that they can continue for some time even though the stars may seem aligned. In other words, we are still waiting for a shorter time frame breakdown before we go short. I believe this is just around the corner but until then we patiently wait for that to happen. The risk for being long here is too high in my opinion because that downside catalyst can happen any day now and when it does, it will transpire very quickly.

SELL, SELL, SELL:

I want to update the listening audience that I am placing a major sell signal for next week. I am seeing some incredible divergence signals on all major indexes (SEE S&P 500 CHART BELOW), divergences in the high-lows list to Wilshire 5000 that we have not seen since May 2011 (SEE BELOW), and copper broke down last week preceded by divergence similar to the breakdown in Feb 2011 a few months prior to the stock market peak (SEE BELOW). Overall the market is about to correct BIG TIME in my opinion very likely next week now that OPEX is done for this month. Once we get a daily close below 1338, we should see a fairly swift and significant decline of 5-10%.

As Brian Shannon likes to say, what is the "essence of the trend"? This is how the different indexes look right now on the hourly chart since the rally started in November. Dow looks weakest in my opinion regardless of the fact that it pierced the 2011 highs. The other indexes have yet to break their downtrend lines. I don't think it is time to short just yet: