Institutions, along with short-covering, have been running the market up into the close of the quarter to show that they were not left out of the rally. However, I consistently warned that "V" moves up into significant resistance are a recipe for trouble.

That trouble started with the GM news and investors scrambled to protect profits. That leaves the market at an important juncture that we need to watch carefully to see what clues will lead us to the next move. Will the selloff on Monday turn around and take it back above the recent highs, or will the minor support below break and send the market plunge back down to the March lows?

This could continue to be a volatile week with the end-of-the-quarter window dressing out of the way and quite a few economic releases coming out -- most important, the jobs report on Friday. It will be important to see the markets reaction to the pending news.

Last week, I warned that I continue to remain defensive and cautious during the recent rally because I need to see other significant characteristics show up before I will buy into an intermediate-term move. Most notably, I want to see the leadership stocks breaking out of sound bases to confirm that any move is real. Until that happens, I'm not going to get too excited about anything.

The percent of stocks above their 40-day moving average is still pointing to overbought conditions even after Monday's sharp selloff. I would like to see this indicator drop back down to the high teens at least before another rally attempt is made.

Percentage of Stocks Above 40-Day PMA TC2000