MORE ARMS

So the markets are upset that North Korea launched missiles that landed in the Sea of Japan. Seems to me it should be bullish as the "long range" missiles went about as far as a Chad Pennington down and out.

I am not itching to do the fade the gap trade today without some "confirmation" such as a strong financial sector or rapidly improving market internals. I don't see it now but I will be watching closely.

The markets are fairly overbought with both the Volatility indexes and the 2 day RSI indicators flashing sell signals. The question market watchers are going to want an answer to is, will the buy the dip crowd step up after many sold lower and may be itching to get back into the newest bull market.

Dick Arms on realmoney.com has some interesting comments this morning in a column that he titles "Stay Long But Be Wary" and goes on to say "I would suggest to stay with long positions established on the June lows, but with a wary eye."

Last week he wrote that "profit taking and even some shorting may be in order." Not sure if he realizes that he is giving mixed signals but I find it kind of disingenuous. Maybe he is just following the lead of the RM chief forecaster.