There has been a lot of talk among the rally's skeptics about the growing number of non-confirmations––several key market indexes haven't corroborated the new highs seen in the headline indexes. These non-confirmations, which include fundamental, technical and even international divergences, aren't necessarily sell signals, but they warn that the latest moves in the major market indexes are masking underlying weakness. Basically, they suggest the market may already be declining, and the major indexes just don't know it yet.

For example, there is some belief that the recent run up in the Dow Jones Industrial Average, the S&P 500 Index and the Nasdaq Composite is based more on financial market factors––a falling dollar, risk-based investing, near-zero interest rates––than on economic fundamentals, which Federal Reserve Chairman Ben Bernanke said Monday remain significantly challenged. Bernanke said that although economic growth is likely, it is expected to be less robust than hoped considering credit flows are still constrained, economic activity remains weak and unemployment is much too high.

Technically speaking, while the Dow, S&P 500 and Nasdaq all hit new yearly highs this week, Miller Tabak & Co. chief technical market analyst Phil Roth said the market strength is shrinking as the new highs have not been accompanied by new highs in some transportation and financial indexes. And Dow Jones columnist Palash Ghosh points out that the Russell 2000 Index, which tends to outperform the broad market on the way up and underperform on the way down, has not only failed to surpass its high in September but has dipped below the 50-day simple moving average.

But perhaps one of the more intriguing non-confirmations is occurring in Asia, which, as evidenced by President Barack Obama's visit this week, will continue to be an important contributor to the U.S. economy's growth. China gets most of the attention of late, but Japan still has the largest economy in the region, and the second-largest in the world. So while the iShares FTSE/Xinhua China 25 ETF's new high on Monday may comfort U.S. investors, it may be more significant that Japan's stock market is warning the gains in the region, and in the U.S., may be fleeting.

The iShares MSCI Japan ETF  hit a two-month low of $9.46 last week, confirming a pattern of lower highs (the October high of $10.05 was below the September high of $10.38) and lower lows since peaking two months earlier.

This negative divergence with U.S. markets has proved prescient in the past. The EWJ hit a new high in early-2007 then trended slightly lower until breaking down in August; the major U.S. market indexes topped out at all-time highs a couple months later. And the EWJ's peak in 2000 preceded the Dow's top by two weeks and the S&P 500's and Nasdaq's respective peaks by more than two months.

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