Overbought Condition Is Being Worked Off

So far the drop that got going Wednesday has hardly changed the look of the up move that began two weeks ago. I had expected a downturn by now, and perhaps it is starting, but so far the drop is far from convincing. Volume remains light and unexciting.

What is surprising is the action of the Arms Index. It was, as one might expect, quite bearish on Wednesday's selling. But the prior four sessions also produced bearish readings in spite of the market rise. That unusual action has moved the short-term Arms Index moving averages to somewhat oversold readings, as we see on the second chart below. The implication is that the overbought condition is being worked off without a big decline. ...306 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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