Danger of Pullback Remains

The US market was more resilient than I expected last week. What I expected to be the beginning of a significant short term pullback has ended up with the market moving largely sideways. Through this sideways movement, the market has also managed to digest much of its short term overbought condition. Even though the market is no longer short term overbought, it is still slightly overbought on an intermediate term basis and a pullback to around 10,600 points would allow the market to move much higher in this recovery market in a much healthier way.

My continued expectation of a pullback along with the number of heavy weight economic data that we will be getting this week tells me that its going to be a volatile and tricky market to play in this week (see Stock Market Calendar). I would continue to be cautious about being newly long in this market.

For now, the Dow continues to be in an all out bull trend.

Chart of Dow Made Using Telechart. Want Your Own Charting Software? Download FREE Now!