Overbought in a Tight Range

At the middle of last week, we were looking for a rally off the November support level, but probably not new highs. The damage done early last week had been enough to break the uptrend line and turn the MACD negative. That suggested a change in market mood and a start of a slide. So when the jobs report came in on Friday, the reaction was immediate. But volume was lacking on the advance, and the move was slowed shortly after the opening surge.   

On Monday it was apparent that the markets, after the rise, were encountering very difficult resistance. That resulted in the very tight trading range we see on the last entry of the first chart, below. Also, the second chart shows us that the five-day Arms Index has become overbought. It still looks as though, after the traders finish digesting the jobs news, the markets are headed lower....252 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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