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The jobs news today can hardly be described as good but don't tell that to Mr. Market. Right now he's on a bull tear and doesn't care what the news is; he's going higher just because he feels like it.

My last update on stocks noted that the S&P had rallied up to the neckline of the inverted head and shoulders pattern we had been watching for quite some time. Since then stocks have broken out above and seem to be headed for a test of the year's highs:

There are some signs, though, that Mr. Market might be getting a little bit ahead of himself.

My buddy, RC, just sent me this chart that has him “concerned” about the near-term direction for stocks:

In the short-term I share RC's “concern.” The divergence of the McClellan Oscillator in his chart and in the RSI and MACD in the chart above it are technical red flags warning that the rally may be running out of gas.

I'm also concerned about the fact that financial stocks continue to lag badly behind the broader market. While stocks broke out, financials broke down out their pennant formation:

In addition, the “smart money” is seemingly positioning for at least a pullback

…and the “dumb money” is getting pretty bullish:

Both technicals and sentiment then are lining up against stocks right now. So is Mr. Market doing the Wile E. Coyote?

That I can't say but, all in all, I do think it's time for a dose of caution.