Just two days ago I was saying that we were right up against the top of the consolidation that has been with us for three weeks, but I didn't feel it was the start of a breakout. Instead, we have suddenly dropped all the way to the bottom of that same consolidation. In previous weeks we had been watching the 1388 area of the S&P 500 as a critical support level. We got very close to that level yesterday but did not break it, meaning that we are still trapped in the same sideways area.
But please be vigilant. If that critical level is broken it will be a sign of more downside to come. I suspect that will occur before long for two reasons. The first is that, as seen on the first chart below, the slide has broken, by a small amount, the uptrend line going all the way back to October. Second, most of my indicators say that we are, on a longer-term basis, at a very late stage in the advance. Note, for example, the longer-term Arms Index moving averages on the second chart....315 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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