There were no breakouts this week! That's a sure sign that the best thing to do is to hold off on taking new positions and take profits where you can and cut losses where you can't.

Although the market moved higher on Thursday on the strength of the 3rd Quarter GDP number, the savvy investor recognized that the number was artificially inflated by Government spending and volume was notably weaker than the day before. A reverse on Friday was to be expected but weaker than expected consumer spending and no increase in incomes, despite the GDP growth, turned the reversal into a rout. Although the markets closed a little above the day's lows on Friday, on balance it looks as though the consolidation will continue.

Thursday's gains were insufficient to support the upward trend of the Russell 2000 and our trend indicator turned downward. The trend indicator includes consideration of the crossover of two exponential moving averages which are show on this chart.

The NASDAQ trend signal uses slightly different ema's (because the volatilities of the two indexes are different) but we see that the crossover point is fast approaching for the index also. The NASDAQ is also testing support at 2040. On the more optimistic side, we see that the NASDAQ has fallen below its 2-standard deviation Bollinger Band which can be a signal that a rebound is near. On the other hand, stocks have a tendency to track the outer band for several days before turning around.