Shouldering Head and Shoulders

Markets seem to be stalling now after a nice advance in the last three sessions. The rally has taken the S&P just above the level I had been watching. I had thought the top of the rally off the very oversold Arms Index moving averages would stop around 1575. It still  has the appearance of the  right  shoulder of a head-and shoulders formation developing.

Now the 5-day Arms Index is back up to overbought levels, and the 10-day has started to go in that direction, as we see on the second chart below. The implication is that we are likely to see a new slide starting quite soon....241 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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