This Is What Monday’s Action Tells Me

Monday’s action, if you are a bull, should worry you. Oh, I know the market
is news-driven, but I deal with its action alone. On Monday the market reversed
a monstrous 245 point Dow opening. My
problem is not only the reversal…which I will get into in a moment. The main
problem was that it happened on no news. Overnight, the market ramped up because
of good war news, but came down with no bad news. This is something to think
about.

As far as the technicals go, Monday’s action tells me one thing…and only
one thing. THE MARKET FOUND AN AREA WHERE IT HAS
PROBLEMS GOING HIGHER. Very simply, days like Monday tell me that
buyers have become exhausted, and near-term, sellers have the upper hand. In a
normal world, I would tell you the market is now on its way down. But this is
not a normal world or a normal market. I will go as far as to say that we
probably now back up into the wide trading range the market has been tracing out
since last July…which actually is not the end of the world. If the market can
keep backing and filling in this range…and then break out, it will be a
tremendous positive. But…let’s not put the cart before the horse. I expect
more gaps, more reversals, and more psychotic action in the days to come…and
then we get to deal with earnings.  

Now I know why Prozac, Xanax and Valium sell so well. Stay safe, play it close
to the vest and protect your principle.