During the first two hours of trading, the SPY has charged towards a test of its prior two highs -- at 141.05 (11/30) and at 141.16 (11/22).  Thus far today, it has a high of 141.14, which remains just 3 cents below the 11/22 high.  My near-term technical work remains in very constructive condition, and argues strongly that a pullback ended and a new upleg started after Fridayââ,¬â"¢s low at 138.99.

From a larger perspective, however, letââ,¬â"¢s notice that while all of the meaningful pullbacks since July show a series of higher-lows, juxtaposed against higher-highs on rallies, momentum actually peaked at the 10/26 high of 139.  The 2006 high at 141.16 (11/22) and todayââ,¬â"¢s test of the high both show much lower RSI readings, which if nothing else is a warning sign that the power underlying the July-December upmove is dissipating.

As of now, the negative divergence in the RSI represents a yellow caution flag.  However, a decline that breaks Fridayââ,¬â"¢s low at 138.99 will morph the November-December price action into a very topping-looking pattern.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.