Weekly Review

After a few days off, it's time to review last week and look ahead. The markets had a good week last week with the Dow gaining 115 points. In fact, all of January has been good so far, as you can see in this weekly Dow chart. Too good, some are saying. As you can see, all of th indicators are quite overbought. However, going back over a year now, the indicators spend a long itme in overbought territoray before any correction. The last two major corrections were preceded by indicators saying overbought for seven solid weeks. We have only been overbought for three weeks now. So while the market may be starting to look toppy now, I don't think it's quite time to jump ship just yet. The RTC in fact is looking quite healthy. It would take three weeks at current levels to get a bearish setup, or a one day drop to 11,651. I don't really see that happening any time soon.

That said, tomorrow being "Monday" (OK, it's Tuesday but it's the first trading day of a holiday shortened week) and all three futures currently being down by non-trivial numbers (ES, NQ, and YM down 0.31%, 1.08%, and 0.13% respectively), I'm expecting some downside action. BTW, I think the Nasdaq futures decline is due entirely to Steve Jobs apparently not feeling too well. While I wish the man well, is he really so important as to move the market that much?

So basically, I'm looking for a pause tomorrow, followed by upside continuation later this week. Thus, I continue to claim we're in a rising swing trend and the green arrow remains in place.