We finally made the move over the 1080 level on the SP 500. It took quite a long time with lots of close calls that teased the bulls and gave the bears reason to wipe their brows in relief. The gap was on huge volume back in October 2008 thus it really came as no surprise that we failed the first tests up there. With the bears never really able to sell things off, the bulls finally found a way to get the job done. At the same time we cleared 1080 on the Sp, the Dow made a run and cleared 10,000. It felt really good to anyone who has a bullish slant. The real question that's being asked is whether or not we can hold over Dow 10k and above Sp 1080. There are some signs that short term, it will be tough for the bulls here. That does not mean that anything terrible is going to happen to this market. Not by any means. It does mean there's a real chance we see some struggle up here and here's why. If you study the daily charts you will see some very overbought stochastic's. The SP 500 and Dow now have Stochastics heavily Overbought at 95.  In addition with our new high printed on most Indices we did not confirm the move per most Oscillators.  See our first 3 Index charts below. It can grind a bit higher but that's all.  The Dow has four new highs in price with four consecutive lower Macd readings. This normally would bring a bout of some selling. Again, it doesn't mean anything horrific is on the horizon but it does mean the risk for long side plays has increased here. It tells you first and foremost to reign in your enthusiasm. Now, if we had the negative divergences but we had only a neutral stochastic, then it wouldn't be as much of a red flag very short term. However, when you combine the two, it does say to go real slow here. It's not a situation that says go short with gusto but if we have a labored move back up and the oscillators don't respond, we can short a little bit. The danger being an incredible number of very important earnings reports next week that will move the market around with great volatility. Bottom line here is that we have some very short term red flags that need to be respected by the bulls. Quadruple negative divergences and overbought stochastic's. Please respect this reality and adjust your thinking accordingly.

  

The real thorn in the side of the bears is unquestionably coming from the behavior of the dollar, which on its best day, can barely get a bid going. Commodity stocks pull back a bit but then find a bid all over again. So many are looking for that inevitable dollar reversal, it tells me we may not see it for quite some time. Always rallies but nothing very sustainable. The UUP would have to recover 23.25 to be in good shape again but for now, it's showing nothing but slow erosion day by day.