waning momentum - The rebound following a shallow retrace of the post-cliff-deal rally has been lacking momentum, across major benchmark indexes (Chart 1). So far, the rebound also counts better as being corrective.
negative divergence - Despite prospects of fresh Hope Rally highs, notable negative divergence between index prices and indicators are now developing (Chart 2).
internals not confirming - Similarly, the advance/decline line associated with SP500 is yet to confirm the recent advance in the index (Chart 3).
In light of these developments, the rebound over the past week is likely a small degree b wave of a flat/triangle or complex pullback. It is likely part of the blue wave [ii]-down or red wave B-down illustrated in Chart 2. Wave c-down is likely next, with an initial target around 1440 in SP500.
Please see Cliff Low (1/4/13) and 2013 Outlook (12/28/12) for discussions of the larger picture.
