This Rally May Be Ready to Quit

Wednesday's IBM (IBM) action is giving a strange dichotomy between the Dow Jones Industrials and the broader averages. All the averages, however, are getting near the top of the trading range again after being at the low point four sessions ago. In the process, the Arms Index's daily values have been bullish and have offset bearish numbers, thereby putting both the five-day and the 10-day moving averages into moderately overbought territory. The Volatility Index (VIX) has again moved toward an extreme level of complacency.

Low volume and a narrow trading range on the S&P 500 are other indications that the rally of the last few sessions may be about to quit. Traders who decided to go to the long side for this rally (in spite of my overly cautious suggestion to just ride out the anticipated rally and wait for the downside to resume) should move their stops in very close to protect a small profit. A penetration of last week's support would be a reason to go aggressively to the short side....279 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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