Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Going Nowhere...

Stock-Markets / Stock Index Trading Nov 04, 2009 - 03:05 AM GMT

By: Jack_Steiman

Stock-Markets

I can try to think of a catchy title but what a waste of time. Only thing to say is what I said. We are Nowhere folks! The tape isn't a thing of beauty for either the bulls or the bears. It's playing, on almost a daily basis, with the 50-day exponential moving average on the S&P 500 while trading above it on the Dow and below it on the Nasdaq. A hunger for lower beta and lower P/E's is the story these past few weeks. That happens when markets, at the very least, are in correction mode. We fell 7% off the highs but there's been no follow through at the 50-day exponential moving average on the S&P 500, and considering we have the financials living there, they will have to falter much harder than they've already done for the S&P 500 to start looking truly bearish in nature.


What appears to be taking place is the market is waiting on two gigantic events this week. We have the Federal Chairman Bernanke’s ruling on interest rates and his thoughts on the state of the economy this week as well as the powerful Friday’s Jobs Report, which will, of course, be on Friday. The market wants insight from both before deciding to take those 50-day exponential moving averages back or losing them for quite some time. Both are very key reports in that the market wants to know if the Fed is going to raise rates in the near future. He won't say if he is outright, of course, but he will hint at it if that's his intention. If he does hint at that, my gut says the dollar moves up and the market falls hard. The market also wants to know if the bleeding has stopped in terms of job losses, and if salaries are moving higher. Also hours worked. With the Fed out tomorrow on interest rates, we will get plenty of fireworks soon enough. The fun is about to begin.

We started the day lower, despite some great merger and acquisition news. BNI (Burlington Northern) and BDK (Black and Decker) were both taken over pre-market at huge premiums to their closing prices. You would normally equate this to a market flying higher before the opening bell rings, but strangely enough, not today, even though we were oversold. We started the day lower and spent the rest of the day going back and forth, although most of the time was spent in the red. A late bid took the S&P 500 and Nasdaq in to the green with the Nasdaq leading up, which is good. The Dow fractionally red on a percentage basis. Again, nothing from nothing, but yet another day where, although it's below the 50-day exponential moving average a bit, the bears were unable to take it down with force. Below, yes, but no follow through by the bears, which leaves the door open to recapture if the news from Fed Chairman Bernanke and the jobs report are very favorable toward low rates and economic growth. A big if.

When markets go lower and look bad, fear rises. The average trader or investor sees red arrows and thinks this is a definite prelude to destruction of equities. People have lived through two nightmare bear markets over the past nine years. The kind seen once in a hundred years, yet they've had to survive the torture twice in just those nine years. Red to them now means the potential for something unthinkable. It's understandable as fear is a much more powerful emotion than greed. Greed requires no emotional energy. You flow with it. There's no pain. Fear is created through bad experiences and thus will always carry more weight.

The question before us, therefore, is whether we're headed for the dreaded bear market once again. I'd be foolish to tell you that we definitely were not. There's always that possibility. In the short term, I don't see anything worse than the old low at S&P 500 1020. 2.5% from here. No fun, but nothing devastating. The reason is, the oscillators on the daily charts. Tremendous unwinding of those overbought daily oscillators has already taken place. The nasty negative divergences have already unwound plenty. All of this doesn't preclude the possibility that we could stay very oversold for a long time, but this is not usually the area one would equate with the beginning of market annihilation. I'm sorry bears, and I could be dead wrong, but short term I don't see anything worse than 1020 S&P 500.

S&P 500 support, critical support, is now 1020 with 1047 resistance. Then we see 1060, 1074 and lastly, 1101. I don't think we have any chance of seeing that level short term. Below 1020 we see 980. Nasdaq resistance is at 2083. 2040 is massive support followed by 1960, a full 4% below. That would be painful indeed. The markets are vulnerable here. Good news is, being ignored somewhat as it was built in long ago in this rally off the March lows at S&P 500 666. This is a VERY DANGEROUS market. Aggressive playing makes no good sense. A nibble here and there such as we did today on the QLD (Ultra QQQ ProShares) is all you should be doing with a tight stop in place. We got QLD at 48.10, but have a stop only 1.10 lower at 47.00. No big losses will be tolerated here. Please go very slow here. Accept what's in place and take measures accordingly. Almost all cash is best if not all cash at times.

Peace

Jack

Jack Steiman is author of SwingTradeOnline.com ( www.swingtradeonline.com ). Former columnist for TheStreet.com, 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 SwingTradeOnline.com!

© 2009 SwingTradeOnline.com

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 http://www.MarketOracle.co.uk - 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