Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Another Red Flag...

Stock-Markets / Stock Index Trading Sep 10, 2009 - 02:33 AM GMT

By: Jack_Steiman


Best Financial Markets Analysis ArticleThe fun stuff is going to end at some point folks. These negative divergences on the big leaders is going to kick in big time some day. Now? Months from now? My guess is, not yet, but we are seeing signs.

Look at the chart of Apple Inc. (AAPL) tonight. Look at that bearish engulfing stick today off of yesterday's gap up. Look at that massive negative divergence. One after the other on each new high. Same can be said for all the big cap leaders.

One after the other on each new high.

Like clock work. Set your timer to it. New high price, lower high MACD. The market is getting more and more dangerous. This doesn't mean we won't see new highs. Not one bit. Probably will. Just start grasping on to this reality, every new buy is dangerous but you can't short yet because we have not taken out any significant support levels and have not had that reversal bar that says enough froth is enough froth.

With 1018 gap and the 1010 70-week moving average support under current price, you just can't say now I'm just going to short aggressively, or even at all. You have to play the long sideuntil we get a signal change. Simple as that. Every time it looks like it's finally upon us, it isn't.

However, the reversals again today off another negative divergence on the daily charts on stocks like Apple Inc. (AAPL) tell us to keep things light. NO full portfolios. NO long term portfolios. We probably go higher still, but the trouble signs are increasing one by one. And it's not just AAPL or other leading stocks, in some cases it's leading sectors.

Look at the chart of the Financial Select Sector SPDR (XLF) or the financial ETF. What a horrific MACD and negative divergence on that daily chart. Does it mean it can't grind higher? Not at all. It can. However, hold your breath if you're buying it and pray real hard. The buy weakness mentality is still out there in full force. Some day it won't matter. Just recognize that there are increasing risks and dangers out there. AAPL and the XLF tell me that the risks are definitely increasing in a big way. Let's hope the market decides to hang in there a while longer for those too aggressively long but you never know. I do think they will but you get the idea. Easy does it.

We started higher yet again today, right in to the teeth of overbought, as the economy received good news on housing. Applications increased 17% thus the futures reversed quite nicely out of the red and in to the green. We jumped up a bit at the open and watched the bulls move things higher as the day wore on. Little fight from the bears as usual.

Then we saw what I wrote about above. The big cap leaders such as Research In Motion Limited (RIMM) and Apple Inc. (AAPL) began their rollovers and the markets came down off their highs, although I wouldn't exactly say things fell apart. Pulled back off the top would be the best way to describe things.

There was enough money rotating around to keep the market from falling too hard off the highs for the day thus the reality of not getting too bearish too fast quite yet. That day will come but not yet. Let's see how the market sells or not now that it seems intent on trying to unwind finally from overbought. It can stay overbought and sure seems to want to. A little selling first would be best.

I am getting an enormous number of requests about playing the gold trade. It is a very popular trade. When should I get in? What's the perfect support to buy in to? These are scary questions when it comes from too many people. I'm not saying not to get in. Do so if you feel you must but this is becoming a very crowded trade and makes me nervous.

Being on the same page with the masses always makes me feel like I'm on the wrong side of the trade. The last time it worked for a while was 1999. We know what happened after that. Maybe gold goes to 2000$ an ounce and SPDR Gold Shares (GLD) and all the other gold stocks explode higher. If you feel you should be in the trade, then by all means do so. I can't participate under these conditions. Please be careful and if you do enter, don't be greedy and keep stops tight.

The market remains on an overall buy signal. Risk is increasing but you have to remain on the side of the signal in place. It's not easy and I respect that fully. My best guess is we extend to new highs over S&P 500 1039 soon, but I wouldn't go out and celebrate it. Important support, the most important short term support, is S&P 500 1018 down to 1010. As long as that confluence of support holds, and my guess is it will short term, then we should see new highs of some type before this all comes tumbling down. Please don't overdo it. There is risk and it's increasing. Longs are appropriate but not 100% in.

Jack Steiman

Jack Steiman is author of ( ). Former columnist for, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

Sign up for a Free 30-Day Trial to!

© 2009

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

Jack Steiman Archive

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in