A Complacent Market
The upward move at the end of last week broke through the small downtrend line we were watching, but then acted poorly as the averages approached and exceeded the September highs (and only in the Dow Jones Industrial Average). The refusal of those highs since then reinforces my thought that the Federal Reserve's recent quantitative easing action put a cap on the market, rather than boost it. We now have a formidable series of highs, as can be seen on the first chart. With the Arms Index becoming overbought on a short-term basis again, a penetration of that level looks doubtful.
The second chart emphasizes an extremely complacent market. Ironically, the public tends to be the most complacent at just the wrong time. The Volatility Index (VIX) dropped below 14 again Friday, which has been a reliable sign of a short-term top....230 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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