There are divergences all over the place in the markets this morning, as the major indices are fighting back to slightly green after opening red. I have been patiently waiting for mild consolidation before legging in deeper on the long side in my portfolio. In essence, that has been my prophylactic or preventative measure–To tread lightly until the market proves itself more as the violent indecision we have seen so many times this summer is capable of reappearing out of nowhere and destroying the best-looking long setups.

I also want to remind you of the continued divergence within the historically-leading transportation sector. As you can see below, the IYT sector ETF remains sloppy, albeit in a narrowing channel. Not much initiative has been shown by the bulls. And yet, the largest publicly traded railroad, UNP, is still in a healthy upend with a bullish volume pattern to boot, even though it has pulled in the past few days. Eventually, something has got to give here, as either the big rail or the sector as a whole is telling the truth about where the market goes from here.

_______________________________

_______________________________