The Rally Hits a Wall
The European euphoria of Friday has had a head-on collision with reality. We did get the rally we were looking for last Thursday, but it was so rapid and extended that the resistance area we were watching, just above 1358 on the S&P 500, was reached in almost no time. That has led to a screeching halt at that level. It is a difficult resistance level that needs to be decisively penetrated. But the possibility is extremely doubtful at this time.
I am referring particularly to the fact that the oversold condition in the short-term Arms Index readings that generated the move was based upon a couple of very bearish days, and those numbers are now being offset. The five-day is already back to overbought territory, and it will not take long for the same thing to occur in the 10-day. Also, note the very narrow trading range yesterday, giving another sign of difficult overhead supply....285 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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