This is what I would look for to go short the rally when it runs into trouble. But first we need to know it will fail.
How will we know?
The rally will take place on low volume. Much as the rally in January did. An important factor will be that we will not see a new high in the Dow Transports. Most likely there will be no new highs in any of the major indices. Also watch the SOX and BKX for failures to rally back to new highs or possibly even recent highs. The BKX has a better chance than the SOX now.
As the rally moves on towards its highs (not the highs) we will see numerous divergences such as lower RSI's in the indices as they top. In addition there will be fewer new highs on both the NASDAQ and DJIA even as the VIX/VXO/VXN fall towards recent lows.
The BP Indices will rally but fail to set anything near the highs seen in January and last year.
When the VIX/VXO/VXN are stretched 10% below their respective 10 day sma's, the TRIN and TRINQ 5 day sma's are below 0.85, the put to call ratio is closer to 0.50 on its 10 day sma rather than 1.0 as it is now and the low volume rally gaps higher then it will be an ideal time to short.
Of course this is all wishful thinking at this time. First we have to at least start a rally.
Market Data 
Markets 
AI
