The rise of the S&P400 Midcap Index (^MID) has been almost uninterrupted over the last month. The steepness of the trendline through the lows and the fact that we have entered a potential resistance zone on mediocre volume is stirring my contrarian instincts and will keep me wary of the long side at the moment.



The DAX index is registering a succession of doji stars just below the 200-day EMA. Unusually strong economic readings from some continental European economies adds to the cross currents of a hawkish ECB, a declining euro and yet mounting cost pressures for Europe's principal manufacturing economy. Even if we leap above the 200-day EMA I would remain cautious about celebrating that fact unless global equity volumes start to kick in more convincingly.



As I have already suggested the lack of volume during the recent advance is beginning to register some awkward divergences on many charts. The exchange traded fund, IGW, which is one of the funds for the semiconductor sector, has been moving up steadily and crossed the 200-day EMA barrier yesterday, but on extraordinarily light volume.



There are growing divergences on many charts in the energy and commodity sector but alas acting on some of these instances has not proven profitable. Nevertheless there is plenty of scope for corrective behavior on charts like Apache (APA).



Microstrategy (MSTR) looks vulnerable as the definitive technical characteristics of a bear flag are in evidence.



Clive Corcoran is the publisher of TradeWithForm.com, which provides daily analysis and commentary on the US stock market. He specializes in market neutral investing and and is currently working on a book about the benefits of trading with long/short strategies, which is scheduled for publication later this year.

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