Nasdaq closed at 2637.54, S&P closed at 1240.4 on Friday. They are coming very close to our target 2650 and 1250. Market may not drop before holiday, however, now is the time to lighten your long holding. If the market can extend the rally till the end of December, I don't think a correction can be avoid in January.
There is a possibility of major indices and the Dow non-confirmation, coupled with very poor sentiment numbers and overbought internal indicators, I remain a very cautious bull. The market is quite sensitive to news, and the internal numbers show a definite lack of commitment, while the Nasdaq is the strongest, indicating that the public is chasing lower quality stocks. That, too, is nasty.
The sovereign debt problem in Europe is a crisis that is not going away, and will not end well, so it will be ongoing headline news that will affect the markets periodically.
All in all, tighten your seat belt and get ready for a roller coaster ride in January.
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