INDU Dow Industrials Daily Chart New All-Time Highs Sideways Channel Overbot Negative Divergence

The Dow exploded higher yesterday up 129 points, +0.8%, printing a new all-time high at 15750.29 and a new all-time closing high at 15746.88. Interesting the Nasdaq (tech; $COMPQ), $RUT (small caps) and Trannies (Transportation Index; $TRAN) all sold off. Tech, small caps and Trannies leading lower is not a good thing, as Martha Stewart would quip. Traders are likely taking profits on all their big long-side gains this year. The leading biotech sector took a hit as well (IBB drops -3%; XBI drops -4%!) showing that the profits are getting locked in. This money floats over to the large blue-chip companies and consumer staples as traders look for a safe haven to park and hide money in the event of a large market sell off on tap; each trader thinking they are smarter than the other. However, if the markets begin to move lower, there will be no safe hiding places; everyone will be bludgeoned. The push into divvy and blue chip stocks only serves to pump the dividend stock bubble higher. SDY and DVY both jumped +0.7% yesterday, in sympathy with the Dow, confirming the above concept. All these folks will likely have their heads handed to them. The divvy stock bubble will likely pop at anytime. Remember, cash is a position.

The Dow is in a 900-point sideways range through 14800-15700 for the last one-half year. Price has spiked above the top rail of the channel but the indicators are not enthusiastic with negative divergence and overbot conditions in place. The bulls may try to squeeze a couple more days juice from the RSI and MACD line but the action is far more consistent with price that is topping. The expectation is lower prices moving forward. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Note Added 5:20 AM on 11/8/13: The Dow receives the spank down dropping 153 points, -1.0%, to 15593, returning inside the intermediate-term sideways channel.