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
STOCK MARKET DISCOUNTING EVENTS BIG PICTURE - 31st Jan 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 Lateral Trading

Stock-Markets / Stock Index Trading Nov 10, 2009 - 06:06 PM GMT

By: Jack_Steiman

Stock-Markets

When markets get overbought you usually expect a fast drop lower, and that may still, and actually, should take place. However, we are still in a clear up trend off the March lows and this market is trying to fight off those overbought 60-minute time frame charts with all its muscle. Today seemed like the perfect day for some unwinding and although we got a drop, it wasn't very much to get excited about thus we head in to tomorrow still overbought on the short-term time frame charts only.


We started out the day with a small gap down and though the bears tried a few times to sell things off hard, it didn't take too much selling to get the buyers trying to pick up some plays. As the day went on you could see there just weren't enough sellers to really unwind things and get some decent selling. We finished the day mixed. Stocks remain in good bases and patterns overall as today did nothing to hurt those set ups. Bottom line is today did nothing to hurt this bull market we're in. Stubborn bulls even at overbought. The way it is for now.

For bull market to remain just that you need to see strong leadership from the big boys out there. We're seeing that whenever we get some selling. Stocks,such as Apple Inc. (AAPL), Google Inc. (GOOG), Baidu Inc. (BIDU), Goldman Sachs Group Inc. (GS), etc. These heavyweights are leading things higher, but just as important, we are seeing the lower tier stocks join the fun. The advance decline line remains very bullish over the past several months, and that is showing no sign of changing. Even when volume isn't explosive, we're still seeing the majority of stocks move higher while on the selling days, the differential isn't nearly as strong. And as far as volume goes, please remember that volume is only important when you are dealing with major tests of resistance and support. Anything in between is not that meaningful.

Support remains critical at those 50-day exponential moving averages. As long as they hold on any selling the up trend remains solid. 2086 on the Nasdaq, 9752 on the Dow and 1052 on the S&P 500. I don't expect those levels to be broken any time soon. There's now a strong gap not too far underneath each major index to help keep the bears at bay. Again, those gaps do make a huge difference as buyers line up at those levels. The gap ups were gap up and run thus these gaps have major significance in favor of the bulls. With the MACD's starting to turn up on the daily charts from low levels and stochastics crossing bullish, getting too much sustained selling won't be easy at all.

I am getting a lot of emails regarding this market starting to seem like froth all over again. It does feel frothy on the surface of things, but if you look deeper there isn't much, if any at all, at this point. This is why I love to follow the AAII Survey to see how investors are feeling. It is a very reliable indicator. We are seeing a big ramp in bearish emotions. The reason why is simple. We are basing out laterally for almost two months now and after a run up, when the music stops to catch its breath, it makes people feel like things are over with.

That it's. All gloom and doom from here, as most folks have encountered, two massive bear markets in under a decade. Lateral consolidations act as a catalyst to ramp up bearishness and that's healthy for the bullish case. Until I see things get ridiculous on the number of bulls to bears, the market is going to try and maintain a bullish slant. Don't let the talking heads and dooms day forecasters allow you to fall in to their trap. Enjoy the amount of bearishness out there as it is a safety net to some degree. Let the market talk. That's the only thing you should be listening to.

We continue to see great patterns setting up and remain in the two plays. More plays to come once those 60's actually do unwind further.

You don't want to get too involved at overbought thus some exposure is appropriate. Too much is not although weakness can be bought for now.

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