Today's action was muted. The day range was the smallest since ........ I don't know when - but certainly for many many days. A day of indecision, lacking conviction. The market seemed to be pausing to see which way the American market goes tonight after its big fall on New Year's Eve.
A narrow range day is usually followed by an expanded range.
Which way will that be - up or down?
Given the overbought status of the market - the odds are to the down side.
The number of stocks from the 50 Leaders above the 10-day Moving Average remains at an elevated level - 96% and it has been above the 80% level since 24/12/09. Usually a spike above the 90% level falls back quickly. But not this time.
In the medium term, the market is still looking strong. So after a pull-back we may see further strength - but that will depend on the depth of the retrace. We'll reassess after the pullback occurs.
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