Watching for a Short-Side Entry

The steep advance of the last three weeks has not yet quit, but it seems to be giving signs that it is about to quit. On Friday, the Dow continued to advance, but both the S&P 500 and the Nasdaq Composite ran into difficulty. Then on Monday, an early advance ran into selling and quickly evaporated in all the markets.

In the meantime, volume continues to be disappointingly low, and trading ranges remain very narrow. Both conditions are typical of markets that are about to turn lower. Add to that the recent over-performance of the Nasdaq, and then look at the overbought Arms Index numbers, and we have a market that I do not want to buy into, and that could give some good opportunities on the short side. But one should not go short until the drop that is being anticipated actually starts to manifest itself....322 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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