Possible Top? (Part Deux)

Last
week
I pointed out that the
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, having returned to its floor level of the year, might mark an
intermediate-term top for the major market indices.
I also wrote that the current rally, now matching the duration and
magnitude of the one last Spring, might be tiring.

While these
suspicions may not be enough evidence to convict, when you add this week’s
sharp sell-off (a six-trading-day retracement — the longest of the rally),
which took the
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and
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below their previous lows (of
two weeks ago), I think we begin to have a case for this market having topped.

I’m taking my cues
from the way the market topped out last May, matching up the market’s six-day
sell-off to a corresponding the six-day sell-off that killed the uptrend back
then. While we understand that it is
dangerous to assume that the market will act the same way twice, it can still be
helpful to look at past patterns for clues about what could happen this
time.While others may say
it’s too soon to tell, I’m switching into downtrend mode.
That is, I’m assuming we’re going into a downtrend now. 
That means I’ll not expect to make much from the upswing that should
come next. Rather, let the market set up
nicely for a good entry point for buying puts.Correction

:
In my last
commentary
I wrote that AT&T cut off users of Excite@Home.
That was incorrect. Excite@Home
terminated the service, not AT&T. I
apologize to readers, and to AT&T. From
now on, I’ll get my facts straight from a news service before blabbing
something I picked up third-hand.