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From: Rarebird	9/21/2010 8:49:59 AM
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Transcendental Market Truths: The Market: This is the typical exhaustion rally seen I've been speaking about. These rallies are designed to punish the premature bears and to convince the fearful crowd to "step right into the pool" in order to trap the maximum number of traders on the wrong side of the market. This is a good example of why selling short prematurely can be a very painful experience. As noted yesterday, I'm watching carefully for a peak this week turning into a rout on the downside. Although the market had a good rally yesterday, it finished with the ARMS Index in slightly oversold territory (1.273). And the common stock advance-decline ratio was very robust. EUO: EUO should rally when stocks dive because it represents a short position against the euro and the euro generally should be considered a "dead currency" with no real future ahead of it. Consequently, when things turn bearish, this is the currency that is dumped first. It's not quite as overvalued as the Japanese Yen, however. Dow Industrials: The Dow Industrials would need to close below 10,464.60 (on the Daily) in order to reverse to a sell signal.

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