Several indicators suggest we are somewhat overdue for a pullback.
The 10 day moving put/call ratio hit its lowest level in over a year; Other indicators we track all suggest that the broad post-election enthusiasm has reached a short term peak; That simply implies that the present overbought condition (and somewhat complacent sentiment) needs a little backing and filling to cool the fires down.
Several other indicators warrant caution here: The Arms index (10 day MA) is at 0.96, the VIX is a 13.25, AAII sentiment is near 60%.
None of these are fatal to the advance, they merely suggest a pause beginning sometime over the next 10 days would be well warranted.
All of the factors we mentioned previously — an underinvested hedge fund community, seasonality, cash on the sidelines and mutual fund performance anxiety — suggest that the retracement will be mild and relatively short in duration.
Put Call Ratio, 10 Day Moving Avg (click for larger chart)
Source: Redwood Technimentals
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Quote of the Day
"You cannot escape the responsibility of tomorrow by evading it today."
~ Abraham Lincoln
Microsoft Conduct Is Challenged Again
As it pushes to settle other antitrust suits, Microsoft Corp. faces new, potentially damaging allegations about its business conduct in a patent-theft and monopolization case pending in a federal court in Baltimore.
In a court filing unsealed late Monday, a small Silicon Valley software company called Burst.com Inc. alleges that Microsoft routinely destroyed much of its internal e-mail despite the many federal investigations and private suits it has faced in recent years, when it was often under court orders to preserve such communications.
Burst.com, whose early investors included the Irish rock band U2, filed its suit two years ago. It charges that Microsoft used Burst’s digital-media technology in Windows, solving a technical problem that was slowing the acceptance of Internet video. Burst also claims that Microsoft tried to patent the technology after a technical briefing from Burst, and altered Windows so that Burst’s product wouldn’t work. Microsoft denies the charges.