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
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 Failed Bearish Technical Setups May Be Bullish

Stock-Markets / Stock Index Trading Nov 15, 2009 - 05:56 PM GMT

By: Steven_Vincent

Stock-Markets

Best Financial Markets Analysis Article"When a market doesn't do what it should do when it should do it then it may be about to do the exact opposite in a big way".

In spite of a slew of ostensibly bearish technical setups, the equities markets have refused to sell off. These technical failures may have setup a potentially powerful bullish resolution.


The 14 day moving average of the put-call ratio is at levels which in the past have corresponded with bottoms in the SPX. On Friday the PCR closed above 1.00 even though stocks rallied. This shows a substantial amount of fear even though the markets are at or very near their highs. From a contrarian perspective, this is very bullish and may be a setup for an upside extension of the rally off the March low. It bolsters the view that the period from August to the present may have been a running correction of the overbought condition on the RSI.



The ratio of New Highs to New Lows has plunged to levels not seen since early August and is showing signs of bottoming with the 14 day moving average now beginning to turn up. This may be another indication that the overbought condition has been worked off in a sideways-to-up trade in the August-November period, setting the market up for a strong continuation move.



The ratio of the Russell 2000 small cap index to the Dow has plunged significantly. Generally, pullbacks in this ratio have coincided with pullbacks in the price of the SPX. This time, in spite of a major selloff in the ratio the SPX is hovering near its highs. Again, the failure of bearish technical conditions to produce bearish price action may be a positive divergence and a bullish setup.

Of course we should also mention that the most recent rally has come on marked declining volume which is generally regarded as a bearish setup.



The US Dollar Index has repeatedly threatened to break out of a declining wedge(s) and has repeatedly failed. This sets up a possible downside acceleration to the 2008 lows. A dollar rally would be bearish for stocks and a dollar breakdown would likely correspond with and upside extension in equities.

Certainly if price can perform so well that it settles near its highs in spite of bearish technical setups then when and if those conditions reverse the upside potential may be magnified. On the other hand, it may be that the situation is pregnant with downside potential that has yet to be realized. The coming week should give us answers and a resolution.

Subscribe to my free BullBear Trading Service to get all the details of my trades as they develop.

The BullBear Market Report is live every Monday and Thursday after the closing bell. Call in with your questions, thoughts and observations.

Disclosure: No current positions.

By Steve Vincent

http://www.thebullbear.com

The BullBear is the social network for market traders and investors.  Here you will find a wide range of tools to discuss, debate, blog, post, chat and otherwise communicate with others who share your interest in the markets.

© 2009 Copyright Steven Vincent - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Theo
16 Nov 09, 17:07
You Missed the Boat, don't worry there are trillions more to come

Buy your shorts back, go long and hope for the best, after all, all bubbles inflate then BURST. Wait for the frenzy then SELL SELL SELL!! FUNNY MON(K)EY.


Post Comment

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