Dick Arms notes that the short term and longer term ARMS Index (TRIN) is extremely overbought. The ARMS index has a pretty decent track record.
This suggests that the Fed’s QE2 and euphoria over tax cuts and FICA holidays are up against a rather overbought condition.
Traders should tread cautiously here:
Dow Industrials with ARMS Index
click for ginormous chart
This chart includes an assumption of a close today in the Arms Index of the current reading of 1.00. (11:15 EST) The 5-day, and especially the 10-day AI moving averages are at extreme levels usually seen at or very near market highs.