Caution Is Justified

After an excursion into new high territory, the averages have come back into the consolidation area we have been dealing with for a months. This has the look of what some technicians would call an Upthrust After Distribution (UTAD). The resistance just below 17,000 in the Dow Jones Industrial Average was a level at which the sellers repeatedly appeared. It was penetrated on poor volume last week and that led to an immediate return to the old zone. Moreover, the drop on Tuesday was abrupt, unheralded, and without significant news to bring it about. All of these are negative signals.

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