Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Bear Flags Break Down...

Stock-Markets / Stock Index Trading Jan 28, 2010 - 06:10 PM GMT

By: Jack_Steiman


The question becomes for the masses, does that matter very much or is it really not very relevant? Let's discuss what breaking down from bear flags can and usually does mean. If we go back to the March lows of 2009 we can see there was never a time during a pullback where the market basically stood still and formed a bear flag. Pretty much right back up once we had some selling. Strong hollow black candles which left little doubt about what was taking place.

All selling was being gobbled up in a big way. No flags at all. When we started our big selling earlier last week we fell hard for three straight days and wiped out two and a half months of gains. Not a problem for the bigger picture. No down trend established. However, and for the first time, we started heading back up a bit but with small sticks and near the bottom of the last big down candle. No strong impulse up.

Today we started breaking down from bear flags. Nothing horrific. Not the end of the world candles lower but breaks nonetheless. The flag can be captured back by the bulls with just a little good news but we have to acknowledge the fact that some of these bear flags did break lower to some degree. Again, not death to the bulls but something we haven't seen in one year thus you have to take notice. The Q's were the most noticeable in terms of breaking its bear flag. If we get strong earnings tonight from Microsoft (MSFT), (AMZN), and KLA-Tencor (KLAC), we could see that break lower move right back up tomorrow. Some change in character took place today and we have to accept it as such but by no means is it death to the market if things can be captured back quickly by the bulls.

So why do I think it's possible to take things back? Earnings plays a part in that thinking but also we are starting to see daily and 60-minute charts get oversold at the same time. Stochastics remain oversold but not the RSI and it's always best on the daily charts if the RSI confirms the stochastics. Not the case here as most RSI's on the major index charts are in the upper thirties. 30 or lower would be the proper confirmation. With today's late rally off the lows we don't have the sixties at oversold any more but are more close to that than anything else. One more strong selling episode would get everything aligned. Only time will tell us if that's in the cards. Markets don't often give entry. Let's see if this time it does by aligning all the time frames at deeply oversold on all the key oscillators (Stochastic's/RSI/MACD).

The PowerShares DB US Dollar Index Bullish (UUP) or the ETF for the dollar did break out today but again it's not a rousing breakout although a breakout and that has to be respected. Sometimes breakouts can grind their way higher but that's not normally the best way to go about it. A breakout and run is healthiest and the most trustworthy. At the same time, some of these commodity stocks are getting aggressively oversold so we have to take this breakout with some trepidation. It's not totally clear. Again, on breakout but barely so and struggling to power forward.

There is one troubling event that continues to take place these days but especially so today. We are seeing some massive sell offs in some major leading stocks. It's becoming an epidemic when earnings are reported, even in many cases if the report is great. The stocks being too full. In other cases, some earnings are not great but they're not selling off just a little bit. They are getting crushed. Stocks like Potash (POT), Motorola (MOT), and Qualcomm (QCOM) come to mind today. There are loads of others. If stocks sell so viciously they don't just snap back. They're selling off on massive volume and thus they are going to struggle for some time at least. If they struggle, then it's likely the market will not be easy with regards to the up side. It'll be so interesting to see how AMZN, MSFT, and KLAC are treated tonight. You don't want to keep losing leaders. All three are leaders in their sectors are heavily weighted.

Bottom line is we're oversold again on the short-term charts. Can be a reversal rally at any moment, but for now, with some key index charts losing their bear flags the trend is down. If the daily charts can get significantly oversold along with the short-term charts, that's where we can get a strong reversal back up. For now we have think mostly cash to all cash until things set up. I know that's no fun but this market is changing its trend from what we've seen over the past one year. Is it real? Just a blip meaning a quick correction? is it more? Only a bit more time will give us an answer.



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!

© 2010

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.

© 2005-2019 - 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