New all-time highs for the Dow Industrials could conceivably come next week, but if and when they do, we should pay close attention to the technical quality of the rally. I’ve reproduced a chart below that shows how very perilous the rise from last May’s lows looks from a stochastic perspective.  Note that two of the three price peaks recorded since early 2004 have generated divergent stochastic peaks. This is potentially a very negative development, although it is not quite bearish perfection. That would require a rare three-peak divergence in which each peak is stochastically divergent relative to the other two. But two out-of-three is menacing enough, so we’ll be watching anxiously to see whether this ominous condition is corrected by any rally to new highs. If that rally were to cause the still-incomplete third stochastic peak to surpass the first and the second, the dark cloud that now hangs over the blue chip average would effectively be dispersed.