The S&P could squeeze a little bit more out of the rally if you look at the RSI. What you can’t see is the rest of the chart as I only have so much room before it all looks like a bunched mess of candlesticks, but the top line above the RSI is historically where rallies have stalled. Click here for large screenshot. Nice volume today on this index but nowhere near what would be needed for a short term climax.  You’d want to see the NY-Up Volume north of 90% to complete a 9-1 upside volume day. We haven’t had one of those in quite awhile now.

Given that we’ve just broken out of a confirmed reverse head and shoulder pattern we’ll probably overshoot to the upside as we climb the wall of worry.

If you look at the chart of USO below, it could be in a position to run into resistance at April’s high as there are plenty of negative divergences on that chart. Should oil pullback, that would…or should have a positive effect on the markets. It’s actually quite remarkable that the markets has been able to plough ahead with oil and gasoline so high. And then you have high end retailers like Tiffany’s (TIF) and Coach (COH) that are hitting new highs and you wonder where the consumers are getting all their discretionary income.