Today the Dow broke its lower trendline from the 2/5 low, but before we get too excited about it we should note that there is strong support at the January 2010 high and at the channel line drawn parallel to the trendline at the highs of the rally. Only if those two levels of support are broken would expect a more significant correction.
Negative divergences, deteriorating breadth and distribution days are pointing to an impending correction. The question that remains is how deep it will be. The Qs have support at the January high and the 50dema, so it may just be a shallow correction. The 61.8% RT of the rally is around 44.71, which would be the ideal terminus of a correction - just enough to really juice the bears and enough to provide a solid entry point for the next rally.
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