Finally

For at least two weeks now I have been pointing out the most basic and fundamental principle of the market and technical analysis, Dow Theory, which isn't so much theory as it has proven itself time after time, but in a world were technical traders are on a non-stop search for the 'holy Grail" of indicators, they forget the basic principles of Technical Analysis.

Above is the Dow-30 in green vs the Transports (Dow -20) in white, this divergence joins the many others including the Euro, Commodities, Credit (of all sorts), rates and more.

I would also point out the IWM (Russell 2000) divergence with even the Dow, not to mention the NASDAQ, as the R2k should be the leader of risk on rallies (Just ask Bernanke, he testified to nearly as much before Congress).

 The Russell is in green, the Dow-30 in white.

Here the Russell has not made a new high with the market and is actually down .46% over the last 15 days or a day more then 3 trading weeks.

A couple of weeks late, Grant Williams of "Things that make you go hmmm..." posted this chart of the Dow-30/Dow-20 (Transports0 divergence. If the market is and economy is humming along, then the transports that deliver all those goods should be leading the market, not lagging it.

As for Friday, Bloomberg reports that it was the lowest NYSE trading volume in a decade (excluding holiday trade).

ES is flat from Friday's close, apparently the G-20 meeting didn't do anything to inspire the market. The Euro is nearly flat as well on early FX opening trade, however 3 a.m. EDT is when European markets open so I'm not reading much in to that, other then the weekend news and G-20 didn't lift the market's spirits.

Friday only had 1 dominant Price/Volume relationship and that was in the R2k-Price Down/Volume down which isn't surprising given Thursday's very dominant Price Up/ Volume down which I said is not only the most bearish of the 4 relationships, but also acts as a short term overbought signal and the market's P/V relationships or lack of them seem to confirm that.

Close Down/ Volume Down is usually the most benign relationship and the most common in a bear market, but all relationships need to be interpreted within the trend. Given the nASDAQ / SP-500 move to a slight new high, this isn't the relationship that inspires confidence on that kind of a technical move, even though it was questionable at best as seen in the daily price candle/close.

Friday's NASDAQ 100 close. Internally, 50 (half of the NDX) closed down (both volume up and down).

I'm off to do my husbandly duty and pretend that I'm interested in the Oscar's Red Carpet dresses, then I'll be back to the charts.