Doesn't Look Encouraging
Wednesday saw wide market swings in response to conflicting comments on the "fiscal cliff" negotiations, but these actually did little to change the scenario. The S&P 500 remains priced near the top of its recent rally, and is again pushing against a resistance level, as we see on the first chart below. The early market drop Wednesday did bring the S&P low enough to break the small uptrend of the last week, and it suggests still lower prices ahead. The subsequent rally did not make significant new highs.
Moreover, we are still looking at quite an overbought market, as measured by the shorter-term Arms Index moving averages. Further, as we have been observing, the recent lows were made amid a noticeable lack of panic. The implication is that the last low was temporary, and that the market needs to test or exceed that level on heavy volume before a lasting rally can get going....253 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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