Beware of Underlying Complacency

Neither the drop last week nor the rebound Monday appeared to contain much enthusiasm. Volume in both directions has been low, ranges have been very small, and the Arms Index numbers have been fairly neutral. It appears that neither the bulls nor the bears can lure many followers. The result is a sideways move. Moreover, as we saw last Thursday, the VIX remains extremely low, indicating an underlying complacency.

Looking at the first chart below of the Dow Jones Industrials, it is apparent that the support at the end of last week came in just about where it was expected: at the ascending trendline. So the bounce back to the upper regions of recent trading is no surprise. But one new bothersome factor is the crossover of the MACD, the indicator across the top of the chart. That suggests more downside is coming....311 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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