Beware Following the Crowd

Just two days ago I was writing about the important downside breakout in the averages and forecasting more in that direction. Now we are, instead, right up to the top of the consolidation we had broken out of to the downside. In fact, the S&P 500 went as bit above the late-December high. But before declaring the down move invalid and switching to the buy side, let's take a closer look.

On the two charts below we see the S&P and then the Dow. Note the difference.  The Dow has not gone above the prior highs and the S&P is obviously struggling to get through the level. The move through the lows was decisive, in that it was a dramatic penetration with heavier volume and a wide-trading range. This up move is not a decisive or dramatic breakout, but an edging to, and barely through, the top....270 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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