I'm almost afraid to say it as this market continues to surprise anybody calling a top to it, but the action over the past two days seems to indicate a pullback is underway. As I've said earlier, negative divergence can be found on several charts including the major indices. The number of stocks on the SP500 above the 50 day moving average looks like it peaked at 74% on Thursday. This indicates a very high level of bullishness. When the market moves to an extreme level such as this it will begin to run out of aggressive buyers which are needed to continue pushing the market higher. The aggressiveness shifts over to the sellers which causes the market to decline. We should see at least at 38% pullback to about 770 on the SP500 from the peak in this rally. It could fall to the 50% level but since there appears to be a significant change in the mood of the market there may not be enough fear to get us to that level.

This rally is proving to be a difficult one to call the top on. At this point more upside is possible but it is too risky to go long and get caught by the rally finally putting in a top. All I can say is a top is very close. Since this is quarter end, big money fund managers may be pushing this rally higher and preventing it from topping in order to "window dress" their quarterly statements. They may be selling come April. A few more days of this market acting crazy may be in order.

Yesterday, I discussed AAPL's rally nearing an end and today's price action is supporting that theory. Negative divergence is also showing up on many other 60 minute charts I've looked at including the SP500, DOW and Nasdaq. Since the last time the market fooled me on my topping call I must say it can still go higher but I have a good feeling this time it has run out of steam. The DOW seems to have hit a wall at the 50% Fibonacci retracement of the January high. I'm looking to see if it finds support near the 38% level. Take a look at my Stockchart list and please remember to vote at the bottom.