Decision Point

Markets can't go straight up, and those that do eventually pay a price for their impudence. Reversals and pullbacks can be very painful, especially when they are as dramatic as we saw yesterday. This may just be corrective action that will help shake out excess and allow us to build support again for further action. Also keep in mind that intraday reversals of this type represent textbook topping action. Before we go down that road though, we need further downside action in order to confirm a top is in. Specifically we would need to see indices slice through their 50-day averages. One big, ugly reversal day is not sufficient to conclude that we have seen the top.