Written by Gary

The morning session drifted lower and started to regain losses by 11:30 am. The market trend is now melting up, but the averages remain in a mixed state fluctuating between the unchanged line.

By noon the DOW and small caps were in the green and volume was falling fast touching on anemic at times. Indicators show market weakening and lower values forthcoming, caution is warranted.

We thought we would see the markets correct before marching up to the next $NYA resistance, but feel confident we will see some sort of near-term correction before the expected Santa Claus rally.

Trouble does NOT come until Institutional Investors start Selling …

Take a look at today’s updated chart that shows the trend of Institutional Selling levels as of yesterday’s close. The trend lines are still showing sideways, NEUTRAL action.

By not being aggressive sellers, Institutional Investors have let other investors drive the market higher with their buying. With serious selling out of the way, a smaller amount of buying can still push the market higher.

If you look at the red blue trend lines for the Institutional Selling, they are essentially at the same level as they were on November 11th.

Unless the trend lines start moving into a clear down trend, the upcoming test level of 11,108.39 on the NYA Index could pose a problem. That’s the focus now … the 11,109.39 triple top test on the NYA Index.

Our medium term indicators are leaning towards sell portfolio of non-performersat the midday and the short-term market direction meter is Very Bearish moving from bullish this morning. We remain mostly conservatively bullish, neutral in other words. Right now now I am getting very concerned any downtrend could get very aggressive in the short-term and any volatility may also promote sudden reversals. The SP500 MACD has turned flat, but remains above zero at 25.64. I would advise caution in taking any position during this uncertain period and I hope you have returned your ‘dogs’ to the pound.