A Bothersome Hesitation
Although the market bounced at the end of last week, the drop ahead of that bounce was deeper than I had anticipated. The break of the ascending trendline suggests the uptrend that began in early June is starting to fail. That makes the rally that looked so strong on Friday somewhat suspect now. Moreover, hesitation on Monday, rather than a follow-through, is bothersome. The rally still looks as though it should go further, but be sure not to overstay. Remember, the long-term picture is still one of a market that turned south in March, so playing the upside carries additional risk.
The Arms Index is still oversold on the five-day and neutral on the 10-day averages, as shown on the second chart, below. I am suggesting that aggressive traders remain with the long positions recommended late last week, but have close stops. We are in a very choppy market, so be willing to take quick and small profits. There should be a new opportunity to go to the short side within just a few days....276 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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