A Downturn Still Looms

Since the major break last Thursday, which broke the support level, the markets have been trying to regain their momentum to the upside. In fact, the S&P 500 was able to go to a small new high, but it was not joined by the other averages. So there is still a great reluctance to go lower. However, since the Arms Index is getting more overbought on the shorter term moving averages, and since the volatility index (VIX) is showing disturbing level of complacency, a downturn still appears to be imminent.

On Tuesday, I suggested that traders might put on some short positions, anticipating the next down cycle, which would, if the period remains approximately the same as we have been seeing in the last year, bottom out in mid-December. I still believe that is the place to be. Longer-term holders of long positions could be taking some profits in here also....227 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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