In his January 20, 2010 forecast update Harry Dent, of HS Dent Investments, gives some insights into why the market may have topped or be close to a top:

Out of our three key recommendations in the January issue, two have come to fruition. Our buy target for the U.S. dollar was hit between 76.35 and 77.00, and our sell target for gold was hit between $1,140 and $1,150 (slightly higher at $1,156). Now the dollar is rising and gold is falling. Stocks are only now appearing to take the minor correction we have been looking for and that should continue for the next week or so. But we have seen some interesting developments recently in stocks. The “dumb money” indicators for total put/call ratios and AAII Investor Sentiment have both moved to more extreme overbought readings in the recent minor run-up in stocks. In other words, nearly all the turkeys have gotten on the boat.

That means that despite very low levels of sellers, there will be fewer buyers and the market will have a hard time moving up as well as a hard time moving down. That either means we will continue to see a very narrow range of trading with a slight upward bias before peaking in a few months, as originally forecast, or it is possible that stocks could be topping here.

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