A Quick Reversal
A week ago, it was looking as though the markets had become oversold enough two days earlier to justify a Santa Claus rally that still had further to go. But we also noted that the overhead resistance suggested such a rally would not last long and was only suitable as a long trade by the most nimble of participants. Moreover, the Arms Index was oversold but was about to offset some large numbers and was therefore likely to quickly become overbought.
All of the above has, almost unbelievably rapidly, already occurred, and more! We went from oversold to overbought, and then yesterday that condition led to the start of another downward move. The decline brought in a big Arms Index posting for the day. That has turned the five-day, shown on the second chart, back toward, but not to, oversold again. The implication is that a new slide has begun and has further to go. A return to the 1200 vicinity in the S&P 500 would not be surprising....314 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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