Stock market oversold so looking for a short term rally this week

Was busy this weekend, so a quick note this morning. From the chart provided, there are two blue ring circles. The first ring circle, this could be what I'm expecting the rally will be like for this week... a rally and then a failure leading to an another low before an eventual rally back higher. The second ring circle, instead this could be that the stock market hits bottom this week and then rally to new highs... this my 2nd option to look for. Note that the chart is from today's morning trading so the outcome is still unknown until the market close later today. Also, of the major indexes, the Nasdaq is holding up much better than the SP500, the Dow, and the Russell 2000.

Major indexes at new 52 highs or record all time highs but I'm seeing negative divergences.

After a brief pause or correction in mid July, the stock market major indexes have moved back higher. My call for a rally in late June, whether it would be a short or medium term one, has turn out impressive. From my last post, I advised moving away from individual stocks to index ETFs as many individual stocks had performed outstandingly but could be targeted for profit-taking and corrections. As the chart for the Nasdaq exchange I have provided in this post shows, there are some signs of negative divergences. The 1st small chart shows the daily indicator of the New Highs minus the New Lows with the 5 day moving average (MA) lagging behind this week's highs made by the major indexes. The 2nd small chart shows the  indicator of the 7 day moving average of the advancing stocks in the Nasdaq exchange struggling in the past week. Maybe in the coming weeks these two indicators will 'catch' up as the stock market continue to move higher thus negating the negative divergence in recent weeks. Or this could be hinting underlying weakness that will eventually take down the major indexes whether it will take a few more days or weeks before a big correction for the short term horizon. So for now, caution should be taken and have in place of sell stops if one still have long positions in play.