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WALL STREET CRAPS MARKET OBSERVATION FEBRUARY 11, 2013

February 10th, 2013

MARKET OBSERVATIONS FOR FEBRUARY 11, 2013: The stock market looks like it is about the test its February 1st highs. It is only 17 points away the old highs in the Dow. You can expect one to three consecutive closing new highs in this index before it’s ready to turn down for a more extensive correction. If these new highs are not confirmed by equal or greater strength in the Dow Transports, S&P 500, and Nasdaq indices, it would signal that the general market has lost momentum to the upside. But since the internal breadth indicators are largely neutral, the market may simply consolidate at this higher level instead of crashing down. That would confuse and frustrate a lot of traders by doing so.

Key market indicators show the following:

The market is about to test the February 1st highs. The risk-reward ratio is not good for a more extended move to the upside. And because of neutral readings in the breadth indicators, I would not expect the market to drop much either. This is a time to step aside from the market and keep your powder dry for special situations that may appear in either the Long-Term Treasury Bond Fund (TLT), Gold Miners (GDX), Silver Trust (SLV), or the China ETF (FXI).

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