Market Stagnation Nearly 2 Months Old

Even seemingly business-friendly actions and promises of action by the White House do not appear able to help the markets overcome the difficult resistance that has emerged in the last two weeks. The response of the advance two days ago was led by the financials, yet even they were not able to push through the highs of a week earlier. In terms of the Dow the 20,000 is acting like a magnet, with no moves above or below able to go very far. Actually, there has been very little progress for a full two months now. It is apparent that the up move right after the elections ran into difficulty in early December. We need a breakout with heavy volume and a widening trading range to the upside to revive the move, but it does not seem to be able to develop.

In the meantime, the level of complacency as measured by the VIX is extraordinarily low. In fact, the low on Feb. 1 was the lowest reading we have seen in at least the last 20 years! Also, the longer-term Arms Index moving averages are at very overbought levels....183 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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