Side-Way Market

We had another week of side-way trading. The DJI and S&P 500 indexes have been in the side-way mode since October 13, 2010. The coming week could be interesting. We will have several interesting events - FOMC rates meting and end of election. Respectfully we may see an increase in volatility and maybe the end of side-way action.

So far, many technical indicators suggest strongly overbought levels and it would be logical to see some correctional move. Yet on the other hand, at the end of trading session on Friday October 29, 2010 we had strong bearish volume surge on many indexes (clearly seen on hourly index charts). We had some similar volume surge on October 19, 2010 followed by 2% up-move. We already may see index futures traded 0.5% above the Friday's close level and most likely we may see positive opening tomorrow at the morning. Still, if this happens, I would not be very optimistic. mainly because of the strongly overbought levels.