NEW YORK (TheStreet) -- The stock market on Friday had a bit of a relief rally from the selling of the past couple of days.
The DJIA gained 41.55 points to close at 16775.74 while the S&P 500 closed higher by 6.05 at 1936.16. The Nasdaq was up 13.02 at 4310.65 while the Russell 2000 index closed at 1162.68, up 3.28.
The volume on Friday was once again below average for an up day. This has been a common theme for a long while now. The buying conviction is simply not there on up days.
I am continually seeing ominous signs of a market that is simply running up on air and cannot continue at this rate without some form of correction to the downside.
I am sure that I am in the minority when it comes to evaluating where this market is in terms of overbought or oversold, bullish or bearish.My work is very technical in nature and my algorithm process is based on multiple durations of time. I am not a momentum chaser that buys stocks at the highs in hopes of those stocks going higher. I am old school. I prefer to buy low and sell high. One example of my work is Apple (AAPL). I am seeing ominous clouds on the horizon when I looked at the weekly stock price and compare it to my internal weekly power index and volume trend. Both have been making lower highs on the weekly chart as the price of AAPL has been rising. That is a negative divergence. This is just one example of many. The major stock indexes are showing me the same negative divergence. It is something that needs to be monitored if you are a trader and investor who prefers to buy low and sell high. Again, this can all be found at my Web site www.strategicstocktrades.com. To further highlight my cautious outlook on this stock market, the U.S. consumer tax this summer will be oil. West Texas Intermediate crude is up 9% for the year to date and will affect the consumer as the summer moves along. The Commodity Research Bureau index is also up 10% year to date. This all comes into play as U.S consumers are faced with rising inflation that will hit them in the pocket book. There is no way that consensus gets its GDP estimates for the third quarter with these headwinds. In summary, try not to follow the macro consensus Wall Street pundits. This stock market has some serious issues as we move forward. My indicators are unlike most because I am not a follower. My algorithm indicators tell you when stocks and indexes are overbought and when they are oversold from a trading standpoint and a trend standpoint. Trade is three weeks or less and Trend is three weeks or more in time frame. On Friday, I continue to hold my Broadcom (BRCM) short and Direxion Daily Semiconductor 3 (SOXS) long position. I added a new short position at the close of trading in Fairchild Semiconductor (FCS). Semiconductor stocks are the momentum sector that the hedge funds are chasing. At the time of publication the author was short BRCM and FCS and long SOXS. This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff. >>Why You Should Invest in a U.S. World Cup Run