an tSionna {08.27.12}

It will be important to see how the market reacts to this resistance level we show at the top of our published chart.  There are two schools of thoughts to resistance levels.  The first states that the more times a market tries to breach a support or resistance level the likelier it is to do so.  The other school states that it is negative to see resistance levels unable to be taken out.  I'm more concerned about the fact that all of our money flow indicators are flashing overbought levels.  This has traditionally signaled some kind of correction.  As a reminder, stocks can correct by price {going down} by time {trading sideways} or a combination of both.  Just because we are overbought therefore does not automatically signal that stocks must trend lower.  Valuation and fundamentals also have a say in all of this which we will discuss in more depth this week.

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