Helene Meisler says ...

Nasdaq's overbought/oversold oscillator provided us with a negative divergence on momentum weeks ago when Nasdaq made a higher high and the oscillator did not follow suit. And now you can see it seems poised to head lower once again.



Then there are the number of stocks making new highs on Nasdaq. That too failed weeks ago. First it failed vs. the highs made last summer. Next it failed as Nasdaq kept rallying, and we have not been able to surpass the readings of November now.



Finally, the McClellan Summation Index has stopped going up. We have seen this happen before when this indicator stalls and appears ready to rollover and it turns out to be just a little breather. However, if Nasdaq does not have a decent rally within the next few trading days, this indicator will roll over and that would not be good.

So Nasdaq can save itself, but it must start rallying soon -- within the next two to three days -- and should it manage to rally, it will need to do so with some strong statistics (i.e., expanding new highs). Otherwise these indicators will all roll over and take the market with it.