Recipe for a Pullback

Since the quick-ending rally that followed the jobs report, the market has acted as though it can't go up any further -- but it won't go down, either. As a result, trading has remained in a narrow range with no direction. The action reflects a great deal of indecision, and coming after the long advance since the first of the year, it hints at a change of direction. One gets the impression that the jobs data was already largely discounted and there is nothing to produce an encore.

Add a very overbought Arms Index, as measured by the intermediate-term 21-day moving average, and stir in a very low volatility reading, very low volume, tight trading ranges and an overperforming Nasdaq (indicating a rise in speculation), and it looks as though we have the recipe for a pullback....343 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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