Longer Term Outlook Is Negative

When the S&P 500 broke the critical level we were watching around 1598 two weeks ago it also broke the descending trendline from November, telling us the markets were in the midst of an important change. It appears, in retrospect, that our consternation over the one-day reversal on May 23 was well-founded. It marked an important high point, which could now stand for a long time. The rally of the last few days has only returned the markets to the top of the small descending channel, where resistance is to be expected. 

The shorter-term Arms Index moving averages have gone to a more neutral level as up days and down days replace one another. However, the longer term moving averages are still overbought enough to suggest the longer-term outlook is still negative. This is reinforced by the increase in market volume in the last month, indicating money leaving the marketplace. This does not appear to be a time to be a buyer....287 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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