an tSionna {10.18.11}

 We posted  last week why probability indicated markets were vulnerable to some sort of pullback.  Yesterday stocks lost on average between 2-3%.  There were many explanations for this such as Europe or slowing growth out of China.  Sometimes though it is just as easy to look at whether stocks are overbought or oversold.  By last Friday we had reached a point where we were overbought enough to be ripe for a sell-off on profit taking.  Yesterday's news provided that excuse.  Thus you get yesterday's beat down.  Here's the chart as we see it in regard to money flows below.  You can double-click on the charts to make it larger.

Probability suggests at this point that any sell-off absent substantially new negative news will likely be bought.  Probability also suggests that stocks will consolidate these gains and then potentially head higher in the coming weeks and months.

*Long ETFs related to the S&P 500 in client and personal accounts.