The stock indices are rallying strongly off yesterday’s lows. I pointed out in yesterday’s Blog post as well as in the DBSA that Breadth had reached a level from where rallies began and suggested it would be important to see how the market reacted.

Now, the indices are in varying degrees of retracement with the Russ 2K leading the charge. If one or more make a new high the others should soon follow. Breadth also should expand if new highs are being made. If new highs are accompanied by weak (or negative) Breadth, and there are divergences of more than a few hours near the highs among the indices, we’ll need to be alert for a downside reversal.