The rally off of the June low definitely has the quality of an impulse, but the action in leading stocks has left something to be desired. A few have done well, but not across the board, which is a type of divergence in the action. The are a number of negative divergences in breadth indicators which suggests that the current top might be a (B) wave. Given the slight new high with diverging momentum indicators as well leads me to think that the recent action in the Qs might be a very large flat correction with an intervening upward flat for wave (B). If so, a top should be seen soon, perhaps in the next couple of days leading to a potential short trade to retest the June low.
The PPO of the CPCE is showing some signs of divergence as well. If it continues lower, it will be another caution flag.
Even though the Dollar got hammered today it is still above the May low - another divergence. My hunch is that when a deal gets done on the debt the Dollar will rally and stocks will fall, and the bears will come out in force again just in time to complete the consolidation that's been going on since February.
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