We’ve spoken about the positive resolution to the market’s crossroads, but market internals have been weak enough to cast lingering doubt on the uptrend.
Thus far only the Dow has made a fresh recovery high while the other indices lag. The number of 52 week highs is divergent with the last time an index saw new highs. And the entire move dating back to the beginning of last week has come on light volume, juxtaposed to the high levels of distribution we saw on the decline from the prior highs.
This is all fixable with an advance by the other major indices to fresh recovery highs. Indeed the S&P 500 futures have accomplished this feat in pre-market trading this morning.
The index will need to hold these levels to prevent yet another negative divergence. Worldwide central bank liquidity policies have sustained the market to this point, but central bankers cannot force the hand of institutional investors. Their resumed participation is critical. Without them the market remains in an unsettled position.
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