The Dow Jones Industrial Average and the S&P 500 closed at another multi-year high today. But before you pop the cork on the champagne and throw a party, there are some concerns. First of all, the Nasdaq composite did not break out of its 2 1/2-month sideways channel. Second, the Semis (SOX) closed at a 2-month low. Remember the party usually doesnââ,¬â"¢t last too long when the Semis arenââ,¬â"¢t invited.

As I mentioned last week, the market has been taking its cue from the 10-year Treasuries.  Itââ,¬â"¢s amazing how tightly they have been correlated recently, probably more than I can recall in recent months. Looking at a chart of the 10-year yield it looks as though the dropping of yields may be over.

10-Year Treasury Yield

The trend line combined with the 20-period moving average should be support for the yields. Plus bond prices are getting short-term overbought. I feel that with the 10-year Treasuries being overbought, combined with the lack of participation with the Nasdaq and Semiconductor sector, the market is due for a pullback. Also, as I ran my scans this evening there were may more shorting candidates than buying.

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Tom Incorvia is a swing trader with 18 years of experience in the financial markets.  E-mail him at tincorvia@gmail.com.