Contradictory Market Messages

The last two days of trading carry two almost contradictory messages. First, on Tuesday, we saw in the rapid decline how easy it is for the markets to drop with no apparent news as an impetus. Coming off the very tight trading of the prior two sessions, it was expected and predictable because of the Volatility Index (VIX) and Arms Index numbers. But Wednesday, in the face of what would seem to a fundamentalist to be horrible economic news, the markets moved higher, making it clear that there is still an underling resiliency supporting any pullback.

All this adds up to a continuation of the indecision that I had noted in recent columns, but it does seem to narrow the options. Caught between Tuesday's support and the prior highs, any move out of that with an expanding volume and trading-range scenario would look like an opportunity for a trade. Moreover, the overbought conditions in the longer term suggest a downside move of that sort would be a warning for longer-term stockholders to sell....250 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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