Stay Short or Stay Away

It is a struggle to get a rally going. After the sharp drop last week, some rebound is to be expected. So far, it looks extremely difficult, which suggests underlying selling pressure that has not been satisfied. Nevertheless, a bounce to the 1405-1410 area of the S&P 500 would be normal and unless it went further, it would be a kneejerk reaction to last week's drop. That is what I am looking for here, but I am not willing to try to buy such a small and brief potential rally.

I am bothered by the fact that the Volatility Index has not reflected a substantial increase in the fear level, in spite of the sharp decline. That says the selling has not yet reached a painful enough level to bring in indiscriminate liquidation. We usually need that to end a slide. In the meantime, the Arms Index numbers have not become oversold enough to be a buy signal yet, either. My suggestion is to stay short or stay away for the time being....255 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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