BIG ARMS

Markets are flattish near noon with the SPX +.5, NAZ +3 and the DJIA +10.

Strong sectors- semis, tech, nat gas, brokers and tech while airlines, metals, reits and energy lag.

NYSE/NAZ flat internals;

NDX- 45 GREEN;

SPX- 210 GREEN;

VIX-down 1% at 22.85.

TRIN- 1.03 with up and down volume about equal.

Markets are over bought and the RUT is lagging today- and it has been a big winner of late.

Dick Arms looking for a nice selloff - here is what he wrote this morning:

"The markets have now spent three days in a tight trading range. The volume on Friday was very heavy; the third heaviest of the year, but that may be of little meaning, in that it was an options expiration day. Nevertheless, the three days, taken as a group, are showing us that the market is encountering a great deal of difficulty moving higher. This comes as it butts against the upper trendline of the channel it has been in since March.

A decline of more consequence than the drop on Monday appears very likely here. The critical point will be seen when and if it gets to the line I have labeled on the chart below as the line to watch. A penetration would suggest a far larger decline.

The Arms Index moving averages are still very neutral on a short-term basis but remain overbought longer term. That suggests a larger drop is likely to come in very soon."