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
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 Good Selling....

Stock-Markets / Stock Index Trading Nov 19, 2009 - 02:05 AM GMT

By: Jack_Steiman


If you're still bullish overall as I am, although nothing out of hand, then today is what you wanted to see. There was a chance for a lot more selling than we saw based on two very poor economic reports that came out pre-market. A very low number of new home buyers. 80,000 shy to be exact (520,000 vs 600,000 expected). Also, a higher than expected Consumer Price Index (CPI) (cost of prices to consumers) at 0.3 vs 0.2 expected. Both numbers poor. Each one by themselves is enough to take a market down hard when it's right at resistance and overbought on the daily and short-term charts. (I was even a little cautious and that’s why there’s only one position, Anadarko Petroleum (APC), in our model portfolio.)

Once again the selling wasn't too dramatic. Enough to unwind the short-term charts down to just about minimally oversold. The daily’s remain overbought. The futures, which were decently green pre-reports, tanked some after they came out causing a small gap down at the open. The bulls, as usual, bought up the move lower, but that didn't last too long as sellers came in and took the market lower throughout the day, although no one, at closing time, would say much damage was cause technically because quite simply, there wasn't any. Lighter volume as well and, although volume isn't very relevant unless it's at levels of major breakouts or breakdowns, it was good to see the sellers remain mostly inactive as the markets unwound from overbought.

The key to any bout of selling caused by bad economic news is to see whether the bears are able to take the markets down to critical areas of support, showing they have the fire power to bring this market lower. They were unable to accomplish that today. This doesn't mean they won't get the job done the next day, but it was a positive for the bulls that we came nowhere near the next level of support on an index such as the Nasdaq, where there's important gap support from 2178 down to 2170.

If that level were to be threatened then we'd have to put up a short-term red flag but for now, two pieces of bad economic news caused only a bit of selling that didn't come close to taking out that massive gap support zone. This tells me that although it seems weird based on what's going on out there in the real world, the market remains a buy on pullbacks when the short-term charts get oversold. Nothing aggressive while the daily charts remain overbought but there are windows for quick plays to the long side.

When studying sectors I see little in terms of breakdowns. Everything is selling off the top of their wedges but if you look at real estate, transports, retail and others, they are still holding up quite well overall. If I begin to see any of these start to, not only crack, but break down below their key support levels, this will be a red flag we need to watch. When studying a market we need to watch everything for red flags.

This is just another of what we have to look at. The financials need to be watched especially close as they are being trashed by many of the big timers on Wall Street. If they start to lose their support the market will fall and fall hard. This is why you don't just go out and buy a long-term portfolio. There is still huge risk, although AI doesn't think we'll see any of that heavy risk come to fruition any time soon. I still feel we'll hold up for some time to come but there will always be bouts of selling, and I'll be watching to see if anything inappropriate takes place for the bullish trend in place.

Now, let’s explore the many support areas the bears need to take out to get their side of the story to be more believable. Let's start with the Nasdaq. Support comes in at gap from 2178 down to 2170. Below that we have the 20-day exponential moving average at 2142 and finally the big one at 2106 or the 50-day exponential moving average. That number along with the 20's rise slowly each day, especially the 50's.
Shifting to the S&P 500, we see support at 1083 or the 20-day exponential moving average. Below that we have gap at 1070, not to mention the big one not too far below that at 1062, or the 50-day exponential moving average.

Again rising slowly daily. Rising 50-day exponential moving averages are a sign of strength. The Dow has its big 50-day exponential moving average at 9880. A long way off. Anything above these 50's are just noise on selling. It feels bad but not relevant. Also, you'll need to lose all the 50's in unison. Not just one or two but all three together. A tough and somewhat frustrating market if you're over playing, but if you've been going slowly and making a few dollars overall, you're fine. Do not play hard here. Play, but be appropriate.



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