We're at the Top of the Channel
If the pattern continues, we should move downward from here on the shorter term. Look at the first chart below. There has been, since the June low, a series of very regular waves, each ending with a sharp advance followed by a day with a tight trading range. That happened again on Friday and Monday. Moreover, we have hit the top of the up-channel we have been in over the same time period.
On the second chart we see that both the 10-day and the 21-day moving averages of the Arms Index have become overbought. The implication, especially by the 21-day, is that this decline is likely to go lower than its predecessors and break the uptrend. Therefore, if the drop I am anticipating does come in, do not be in a hurry to buy, until we are sure the uptrend is going to hold....256 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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