The major stock indices have closed higher in 10 of the past 14 sessions, but the trading volume has been relatively light during the rally, which is not what we want to see and raises a red flag.

On the chart, the key stock indices are holding above their respective 200-day moving average (MA). The S&P 500 is at a key chart top at around 1,125. The fact that the indices are above their 50-day and 200-day MA is bullish. The NASDAQ is facing chart resistance at 2,320.

The near-term technical picture is bullish, but watch for some selling pressure due to the overbought condition. The fact that the indices are above their 50-day and 200-day MA is bullish. Investor sentiment continues to be bullish on the NYSE, and recently towards the NASDAQ.

In the past, markets have rallied and then retrenched down, unable to hold on to sustainable gains. I feel this may continue. Trading volume remains light during up days, and this is a red flag.

On the charts, the stock indices are trading at a crux just below the tops on the charts as follows:

• Russell 2000 — 675
• NASDAQ — 2,320
• DOW — 10,650
• S&P 500 — 1,125

This is the third time the four indices have attempted to break above the chart tops. Failure could set up a bearish triple-top formation.

We expect selling pressure on a move towards these chart levels. A strong break would be bullish, but we are not there yet. We also need to see rising volume. And, while there was some decent support on the charts, we continue to see a "death cross" on the charts for all four stock indices, in which the 50-day MA is below the 200-day MA. This is a dangerous bearish indicator.

While the S&P 500 VIX index of option volatility is low, at around 22, you need to be careful, as the months of September and October tend to be volatile based on the historical patterns. Just take a look back at 1929, 1966, 1973, 1987, 1989 and 2008 to see the carnage.

I continue to be cautious given the global risk and the fact that the tough chart tops remain. In the past, markets have rallied and then retrenched down, unable to hold on to sustainable gains. I feel this may continue.