TECHNICALS SPY / BIG ARMS

The SPY pulled back yesterday and closed near the 128.5 area. This morning futures are a tad higher. Dick Arms on realmoney.com is getting concerned about a possible downtrend as he says;

"For a number of weeks, I have been warning that the markets looked as though they were encountering resistance, were overbought and would move out of the consolidation to the downside. Tuesday's action was very important and telling on this point, I believe.

An early attempt to rally quickly failed on no apparent news, and the subsequent drop, while not huge, was enough to decisively break two important levels. One was the bottom of the consolidation that we have been in for the last three weeks. The other, and probably more important, level that was broken was the uptrend line that goes back to last October.

Breaking that uptrend line is ominous. That break says the intermediate-term market direction has changed from up to sideways, at best, and perhaps to down.

If you have not acted already to nail down some profits on earlier buy suggestions, I do not believe it is too late. "

Dick could be correct and we may be starting a downtrend. My take is a bit different. I think we are at the bottom of the trading range in a rangebound market. All the bearish talk I hear now is reminiscent of all the "happy talk" I hear on CNBC when the DJIA goes up 150. Has anyone thought that the Iran problems get resolved favorably and oil goes lower with commodities. I like to anticipate where the market is going rather than focus on where it went yesterday.

I will continue to follow my signals and right now they are all giving buy signals.