Last week, while on vacation, I discussed the reflex bounce from critical market support levels as the headlines blared that “Greece was saved” and “China rescued their markets.”  To wit:

“However, as has been the hallmark of the financial markets, Central banks, and Government officials “raced to the rescue” to ensure a continuation of “market stability.” In the case of China, a swift intervention of liquidity, a trading halt on almost half of all securities and a ban of selling of securities stalled the 30% dive in the index. (Of course, it did.)

For Greece, it was the brute force of Government pressure that brought the Greek Prime Minister to his knees. In a deal that will leave Greece in ruins for decades, the crisis was brought to a temporary end as the proverbial “can” was kicked down the road for a third time. Unfortunately, for Greece, when the debt comes due next time, the situation will be far worse and a similar outcome much less viable.

But that was just the latest headlines. The question that investors must answer is whether the rally that started last week, and continued Monday, put an end to the correction that begin several weeks ago?”

That was “so a week ago…”

Here is that same chart updated through yesterday's close.

As I stated last week:

“To re-establish the longer-term bullish trend, the market will need to move to new highs. Any failure to do so will simply keep the markets trapped in the ongoing topping process that began earlier this year.”

While the prices did manage to breakout of the downtrend that has contained the market since mid-May, so far that rally has failed to attain new highs. Furthermore,the previous oversold condition that acted as the “fuel” for the recent rally has been exhausted with the markets are now back to an extreme overbought condition. This suggests that there is likely very little upside currently and that investors should consider using this opportunity to engage in prudent portfolio management practices such as taking profits, reducing laggards, and rebalancing allocations.