June in September? ~ The Risk Averse Alert

Tuesday, September 01, 2009

June in September?

The similarity to mid-June market behavior and the consequent effect on technical conditions proceeded today...


If correct is the view that the market could remain in a state of suspended animation — not reaching ultimate top for some weeks forward at levels not much higher than now — then it's likely that technical conditions just prior to the final move to top will be weaker than was the case early-July. Thus, both RSI and MACD, for example, (as well as other technical measures) have considerable room yet to pull back. This could easily happen, though, while indexes trade sideways over coming days and weeks.

Still, let's not forget that both RSI and MACD (as well other technical measures) already have signaled increasing weakness in the market's advance off March '09 bottom. So, it's possible top is in (i.e. five waves up from March bottom are complete). Today's bump in volume seems a red flag indicating the greater likelihood of this possibility.

Fast Money
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