In a nutshell, the ES (S&P 500 e-mini futures index) is high-basing after its big rally that day...a sign of distribution on lower volumes, potentially, in preparation for a push higher. There is considerable resistance overhead, however, but with the VIX trading below 25.00 now, that may be a higher probability than in recent months. Of note, however, is the fact that the U.S. $ is still trading near its highest levels since equities fell in July of this year...something to watch and see if the $ continues to rally, particularly under the scenario that I've described in my last post: http://strawberryblondesmarketsummary.blogspot.com/2011/12/currency-wars-about-to-begin.html
The first graph below (courtesy of www.forexfactory.com) shows a drop in the CB Leading Index...yet another indicator which shows a softening of economic conditions relating to employment, production, new orders, consumer confidence, housing, stock market prices, money supply, and interest rate spreads. The second graph shows a drop in the Home Price Index, which is a leading indicator of the housing industry's health.
Perhaps these are saying that the markets are overvalued at their current levels...time will tell.
