The Truth About 14,000

Hello 14,000; goodbye 14,000. Round numbers often become a fixation in the mind of the public, and the misconception is that they are barriers. In reality it is more often the case that round numbers, like 14,000 in the Dow Jones Industrial Average, act as attractors around which trading oscillates. So going through the level and then giving it back should be no surprise.

I believe the overbought conditions that prevail are more significant. This is spreading to longer-term indicators, suggesting a drop is likely to be larger and last longer than previously thought. See the 55-day moving average of the Arms Index, the second chart below. The current level is indicative of a top that could be quite long lasting. Don't be in a hurry to buy on the first dip....241 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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