Fibonacci retracement

So far the broad market S&P (this analysis is also relevant for small caps IWM) has been constructive in its retracement of the 6  month rally from late 2011. The recent lows in place near $1290 S&P and $75 IWM are right the convenient 38.2% Fibonacci retracement. This, in conjunction with the recent stochastics buy signal I wrote about (I wrote specifically about IWM stochastic buy signal which to me seemed more significant in terms of a risk-on environment, but it applies also to the S&P) and it seems the market wants to grind higher before deciding what to do next.

There are some internal measures that worry me about this rally. Specifically the lack of volume (rising prices and declining volume is a warning sign), the lack of upside volume seen on most enduring rallies, as well as the narrow breadth of this rally. Warning signs that all add up to a failure at some point - a point that most likely sits 3-5% above current levels.