A Decided Loss of Momentum

Apparently the biggest surprise to traders in the Fed minutes released yesterday was the lack of any surprise. An indecisive market before the release did little more than bring about a few quick swings in both directions. So let's put the response aside, and observe that the market, as anticipated in this column, has been dropping for two weeks. In fact, if we look all the way back to late May, we see that there has been a decided loss of momentum. A change has become apparent, and there is little reason to think it is over. We have low volume, a still-complacent Market Volatility Index (VIX) and a lack of any action that looks climactic.

Yesterday, we finally had a day with a high enough Arms Index to reflect a slight increase in fear. The shorter-term Arms Index numbers are becoming just a bit less overbought, but those on a longer-term basis remain quite overbought. I see no reason yet to move away from our very defensive posture, even on a short-term trading basis....225 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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