The bullish prognosis for the markets forecast last week played out pretty much as expected. The big question now is . . .will it continue? Virtually all the indices are now in overbought territory as measured by the RSI2, although savvy traders know that in itself should not warrant a bearish view. Volume was, well, pathetic for the previous week, again as expected and that is a significant warning flag when gauging the strength of last week's rally.
I mentioned the concept of "kissing the channel good-bye" in previous posts and all 4 of the ETF basket are poised to do just that with regard to the LR30 upper channel line. However, with fundamentals continuing to crumble as unemployment and foreclosures continue to rise and with the Pres-Elect claiming that the "worst is yet to come", I think suspicion is justified before initiating any new long positions for more than a day. . . or if for a longer period, then tactically hedging those positions for protection back to the recent mean.
Above is the VIX in daily and weekly bars and below that the Telechart T2100, which is the advance/decline line, again in daily and weekly bars. I'm not going to even try to project what the VIX might do next, but I suspect this coming week's post-holiday trading with resumed "normal" volume may provide a strong indication of the next significant trend move.