A Meaningful Drop

One should not underestimate the importance of Monday's decline. It came on the heels of a disturbing one-day reversal in most of the averages on Friday. Volume was high then, as an early session tiny new high in the S&P 500 ended as a low. That makes it look like a potential important turning point, and Monday's weakness just emphasizes the signal. 

Compare the two charts below. The much weaker Nasdaq Composite tells us that traders are moving away from the more speculative type of stocks. That comes after the Nasdaq had been overly strong in recent weeks. That is typical of turning points. We may have seen an important shift in sentiment in the last few days, and it should not be ignored. I believe there is now room for profits on the short side, and certainly it would make sense for the more conservative to at least take some profits on longs....252 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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