A Worrisome Complacency

Wednesday's market action was a repeat of what we have been seeing. Again, the averages had a big drop, more than 100 Dow points, only to see the buyers again start moving in, erasing much of the loss and keeping the various averages within the trading range that has been evident for nearly a month. 

There is an underlying bullishness and complacency that is in itself a worry and becomes more so because we are not seeing overall progress or a penetration of the old 2007 highs. Why a worry? Because the public is invariably wrong. The public is always the most bullish just when it should be the most cautious. Look at the second chart below. It shows the VIX, the Volatility Index, over many months. The recent peak reflected the most complacent conditions in the entire period....261 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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