Break With the Crowd

If you think there is little to worry about and that the markets are headed higher, you are not alone. As measured by the Volatility Index (VIX), Wednesday's low of 13.22 was the most complacent level since mid-2007. If you look at the second chart, it will become clear that low fear, as represented on this inverted scale chart by an upward peak, is almost always associated with an important market high point. This is a strong and disturbing warning not to go with the crowd. At major market turns, it is invariably wrong.

The trading in the past five sessions has been tightly contained, producing narrow trading ranges and suggesting that the sudden rise over the new year has run into difficult resistance. So the struggle continues. I believe the potential for a further gain is heavily overshadowed by the risk....238 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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