Allright, here is another view. I can't help it but I keep noticing the large number of divergences currently is the US stock market and I keep thinking whether they will eventually be resolved in the direction of the current trend (which is currently UP) or the trend itself is about to change. I personally measure the trend by the rolling 3 month return of the NYSE Composite and this index has just now made a new all time high. If you are a bear you must respect this and hold off the heavy shorting at least until we break below the August highs on the NYSE (my approach). So in summary, the biggest positive for the bulls is the NYSE uptrend and the new all-time high. Now to the negatives. To draw a parallel I remember when the Nasdaq composite was climbing fast in 2000 (I was long semiconductors and telecoms) and I got a sick feeling in my stomach similar to the one I have now. I didn't go short the Q's but I sure sold everything I owned. BTW, not everyone was bullish then unlike what has been reported in the press. There were plenty of smart people warning and I particularly remember a character named "Mobius" who basically said on TV that most of the internet stocks will drop 90% based on some interesting valuation arguments he presented. Meanwhile as he was saying this the Nasdaq composite kept going up and breaking into new high ground. But there was something terribly wrong with the price action. The Dow Jones was not confirming the new Nasdaq highs, a situation quite similar to today. As we all can see over the last few weeks the NYSE Composite has made new highs, the Nasdaq has been testing its 52 week high (on lower volume I might add) but the Dow is some 200+ points away from its high. So the Dow is NOT confirming the NYSE. The Transports are not confirming either! In a healthy economy the transports must be making new highs. In addition, junk-Treasury credit spreads have not confirmed either and recently they started to widen a little showing some concern amongst investors stretching for yield. Even today as we are making new NYSE highs the number of NYSE stocks at new 52-week highs is running about half the number we had at the August high which is also another non-confirming measure. In addtion the real estate leaders (HGX) have stumbled over the last few weeks and have not reclaimed their highs adding yet another non-confirmation to the mix. In summary, YES the trend is still UP but the action is VERY VERY UNHEALTHY. To top things off mutual fund cash levels are at all time lows and the public is redeeming. Yet there are some smart bulls who claim that the compressed price action in a number of major indicies a simply a pause in the trend that will renew and take the indicies to new highs. Suppose they are right. I ask who is going to take the S&P to all time highs? Where is the money going to come from? Certainly not from the mutual funds. Perhaps hedge funds? In my estimation only the government can take the markets to new highs buy buying stock and I sure hope we don't resort to that. That's my 2c. Disclosure: 25% invested in index put-leaps looking to add on breakdown through the NYSE August highs. Best.