Caution Signals

The New Year's Eve binge in the markets, followed the next trading day by an even bigger spree, appears to have now gone into a sobering-up period. Even after the drop on Monday, we see clearly on the first chart, below, that movement in the last three sessions has been tightly restrained. We are close to the highs of the last year and not much below the all-time highs going back 13 years.  A large advance from here seems extremely unlikely. 

The suddenness of the rise meant that the oversold condition in the Arms Index moving averages stayed somewhat oversold. But now the five-day is swinging in that direction. Most worrisome, though, is that the volatility index (VIX) is back to its extreme complacency levels, and that usually portends downside markets. Caution here, the market is struggling....229 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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