[FONT=Arial, Helvetica, sans-serif]The Weekly Report For October 4th - October 8th, 2010[/FONT]
[FONT=Arial, Helvetica, sans-serif]Despite an ominous looking reversal candle that formed on Thursday, the markets basically took a rest break this week. They spent the beginning of the week trading in a fairly narrow range before gapping up and hitting new highs on Thursday, which also happened to be the end of the month and third quarter. After hitting new highs, the markets reversed and traded down for the day on an increase in volume. This reversal has many traders worried of a possible top, and while this reversal may certainly mark a short-term high, the markets remain in a holding pattern above some support level[/FONT]
[FONT=Arial, Helvetica, sans-serif]Despite some sign of weakness, the markets remain above prior resistance levels and have given up very little ground over the past couple of weeks. The tech stocks are the area showing the most weakness, but this should be expected as this group led the way higher and is the most tired. The next couple of weeks will be very important as a light volume pullback could set the stage for a powerful end-of-year rally. However, October has certainly accounted for some scary market pullbacks in the past, and the recent stalling of the markets has many traders worried. Traders should monitor the recent breakout areas as any weakness that drives the major index ETFs below these levels would be a clear warning signal. If these levels hold, the benefit of the doubt would continue to lie with the bulls. [/FONT]