Pull-back Ahead . . .

Sell with buy stop. Markets have rebounded with tremendous momentum since the September lows were reached (2 days after our September 19 strong buy calls). While we have had one short term sell call since then, today is the first major sell that we have gotten since September 21. The NASDAQ is up nearly 50% in the last 3 months, and some individual sectors are up even more.

Many stocks and indices are near (just above or just below) strong, longer term resistance levels. This, combined with the very strong sells we have been getting--overall strength factor of over 300 (a strength factor of 150, bearish or bullish, indicates a sell or buy call), lead us to expect a steeper or more prolonged sell-off than average. However, if prices are able to break through (or remain above) these resistance levels, they will likely continue higher for a while. Thus, if index prices (including those below) break more than 3-5% higher than current levels, it may be a sign to reenter positions.

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