Still a Sideways Market

In the past, we have looked at a simple indicator I call the Absolute Percent Change, or APC. It is shown on a 10-day basis for the Dow Jones Industrial Average on the first chart below (inverted scale). It is merely a smoothed calculation of the daily change in the Dow, regardless of direction. It makes clear that big changes happen on market bottoms and small changes are a characteristic of market highs. We are seeing an extreme for many years, indicating we are at or near an important market high point.

Wednesday's wide market swings in both directions -- first in anticipation of and then in reaction to Federal Reserve commentary -- did nothing to resolve the standoff of the last three weeks. It is still a sideways market after a long advance, which comes with very overbought readings in many indicators, including the Arms Index (second chart). I remain extremely cautious....260 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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