Teetering in a Range
The volatility index (the VIX) remains in surprisingly complacent territory. One would expect, in view of the fiscal-cliff standoff and the prophets of doom everywhere, that there would be a high level of anxiety, but such does not seem to be the case. The result has been a market that is unable to push higher but is unwilling to give up any ground. The trading ranges have therefore been very tight, especially on Monday, as we see on the first chart, below.
The lack of consternation is also evident in the Arms Index, with the preponderance of volume continuing to go to the buy side, thereby continuing to produce very overbought readings. As time goes by, the condition spreads to ever longer time frames, so that now the 21-day moving average of the Arms Index, shown below, is now very overbought also, implying a longer-lasting drop in markets. Beware!...237 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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