Prep for a Quick Jaunt Higher

The drop has taken the S&P 500 close to the support level we have looked at repeatedly in recent weeks -- 1395 -- but not yet. In spite of weather and postponed trading, there is little reason to look for any drastic change in what the technical work has been telling us. This is a market that has turned weak, and is breaking key support levels with increasing volume. That suggests we'll see lower markets before long. So longer-term traders should be avoiding the temptation to buy "cheaply" and should, I believe, use rallies as selling opportunities.

That said, the short-term moving averages of the Arms Index are telling us that the markets are oversold. Look at the five-day and 10-day moving average charts below. The S&P is close to a likely support level, and it's still possible that level will be reached before a rally, but be prepared for a quick up move in the next few sessions. It might be tradable for the most aggressive -- with the caveat that the recent breakdown implies it would be a countertrend rally, and therefore one that carries high risk....233 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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