Don't Buy Into This Rally

This looks familiar. Check out the chart below of the S&P 500 over the past year. I have inserted a rectangle over the data when the market slid last spring, and then another rectangle over the current data. The similarity is very strong and the implication is -- if it continues to track -- that we are due for a little more rallying and then a sharp drop to the bottom of the decline.

That jibes well with my recent observation that there is a lack of fear in the marketplace. With the Arms Index moving averages refusing to become oversold, and the Volatility Index reflecting such complacency, it does not look as though we are yet through with the drop. Declines of this magnitude usually end with capitulation, and that has not occurred so far....285 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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