Morning Comments. 17 December 2010

My apologies for the lack of a blog last night. I wasn't well and didn't get round to it.

No harm done. The market continues on its slow, weary way upwards.

The close yesterday is bracketed by the closes on the 7/8 November, which marked the early November high.

The RSI.2 remains extremely overbought.

Slow Stochastic (5.5) also remains extremely overbought, and has been since early December.

A fall by the Slow Stochastic below 80 would trigger a short term sell signal.

Markets can stay "overbought" for extended periods of time. But this one is looking very long in the tooth.

That doesn't mean that a major retracement is in the offing (although it could be). But a few days of weakness would be healthy if this market is to maintain a bullish tone.

Otherwise, we may be looking at a climactic buying session which would surely end this bull rally for more than a few days.

At this stage, such a possibility does not look likely.

Remember, tonight in America is "triple witching" for Options. That often results in dramatic movements - usually to the upside.

Cheers

Red