The S&P 500 hit a new all-time this morning but there hasn’t been a lot of cheering with negative divergences and bigger resistance levels overshadowing the party. There was a lot of good economic news out of the US this morning with jobless claims, flash PMI, Philadelphia Fed, existing home sales and the leading indicator all beating street expectations. This has propelled stocks forward but considering the strength of the news stocks haven’t really responded much. The S&P has touched a new all-time high and cleared 1,990 resistance by a point or two but that’s about it. Despite the historic levels, the S&P hasn’t mustered up much enthusiasm. Part of this may be because an even bigger resistance level is still looming; the 2,000 big round number test, which still appears to be a formidable test. Meanwhile, momentum indicators suggest there could still be trouble ahead. The RSI has not confirmed the new high. The combination of an overbought RSI and a negative divergence suggests that the current rally may be getting overextended and nearing exhaustion, raising the risk of a correction. Another troubling factor about the S&P high is that it is not being confirmed by other indices. While the S&P and the Dow are up on the day, the NASDAQ and more importantly the Russell 2000 are down on the day. Similarly, while the S&P is at a new high, the Russell is way short of its July high and resistance has emerged at lower levels for both the broader index and its RSI, indicating that upward interest is weakening. The Russell diverging bearishly away from the S&P is another sign of potential trouble for markets as it suggests that the troops are no longer following the generals. It means that the breadth of the rally is shrinking with the bulls concentrating on a smaller number of large cap stocks. With indices not responding to good news to the level they should, tomorrow’s speech from Fed Chair Yellen becomes even more important. With speculation growing that the Fed may need to head on a more hawkish course with the economy improving, her speech may need to be extremely dovish to keep the stock market party going. With the Fed moving toward a time of transition, we could still see a lot of action in the markets this week as traders try to figure out where the Fed is heading and when.