It’s a nice change of pace to talk about something other than the stock market’s persistent uptrend getting more and more overbought. This week has brought some excitement indeed. As I said the last two weeks, it will pay to be cautious with long positions because such a market can reverse and fall quite quickly.

Bulls on Wall Street continue to call the shots and have their way. Bears who dare try to venture out of hibernation are smacked back into the cave before they’ve barely seen the light of day. The unshakably bullish action and buy-the-dip mentality has many market observers wondering if it can be sustained, given the struggling economy, moribund housing market, rising food and energy prices, skyrocketing deficit, and persistent unemployment.

The market posted a big red candle today. It was much overdue … and in fact needed for a healthy market. It simply cannot go up in a straight line and engender confidence among investors. Backing and filling is a necessary aspect of a healthy bull market.

This week brings a clean slate among stock traders as the holidays and end-of-year positioning has come to an end. The market continues to show signs that it wants to pull back a bit to work off its overbought condition and allow technical indicators like RSI and MACD to cycle back down in their normal swings. But the cash just keeps flowing in.

The Market Giveth & the Market Taketh Away

by David Brown, Chief Market Strategist, Sabrient Systems

Or is it the dollar that giveth and taketh away?