Best of the Week
Most Popular
1.Four Shocking Economic Bombshells Bernanke Did NOT Tell Congress About Last Week - Martin_D_Weiss
2.Obama Preparing to Attack Iran - Webster G. Tarpley
3.U.S. House Price Forecast 2010 to 2015 - Andrew_Butter
4.The Illuson of Economic Recovery, Major Indicators Point Towards Further Collapse - Bob_Chapman
5.Unusually Uncertain Outlook Shows The Fed is Killing the Economy - Washingtons_Blog
6.Economic Warnings From Niall Ferguson and Nassim Taleb - Gary_North
7.Gold Market Spooked by Deflationary Double-Dip Recession Fears - David_Galland
8.Stocks, Commodities and Financial Markets, The Shape of Things to Come - Steve_Betts
9.Elements of Deflation and the Super-Trend Puzzle - John_Mauldin
10.Wages and Subsistence - 24th July 10 - Ludwig von Mises
Last 5 Days Analysis
The Fed Flashes the Nuclear Quantitative Easing Trump Card - 29th July 10
You’ll Hate Your Gold So Much You’ll Want to Spit On It - 29th July 10
Austrian Business Cycle Theory Vs Keynesians - 29th July 10
Gold Promises and Currency Lies - 29th July 10
Investing for Deflation Part 2: More Reader Questions - 29th July 10
An Corporate Earnings Feast to Digest - 29th July 10
The Number of ETFs Exploding to Over 1,000 - 29th July 10
Stock Market Balancing on a Knife Edge... - 29th July 10
Escalating Violence From the Animal Liberation Front - 29th July 10
How to Pick Stocks in the ‘New Normal’ Economy - 29th July 10
Did BP Accidentally Tap Into the Rigel Gas Field? - 29th July 10
How Think Tanks, Foundations, Big Oil and the CIA Undermine Democracy - 29th July 10
Is WikiLeaks Release Anti-war Whistleblowing or Obama War Propaganda? - 29th July 10
Price Stability Not a Fed Priority - 29th July 10
Bill Gross Ponders "Deep Demographic Doo-Doo" - 29th July 10
Financials, Oil and Gold on the Move - 29th July 10
Kindergarten Double Dip Recession Economics - 28th July 10
Putting Money on the Junior Gold Miners - 28th July 10
Economists Miss Durable Goods Orders Slump - 28th July 10
2011: The Year Of The Tax Increase - 28th July 10
Banks Find A Bid After Basel Watered Down - 28th July 10
Profit From the Global Thirst for Clean Water - 28th July 10
Evolving Global Financial Crisis, U.S. Dollar Heading Down Again - 28th July 10
Investors Beware of Municipal Bonds as Defaults Soar - 28th July 10
Government Economic Lies, The Grossly Problematic Gross Domestic Product - 28th July 10
Economic Warnings From Niall Ferguson and Nassim Taleb - 28th July 10
Will U.S. House Prices Drive The 4.8% “Consensus” Nominal GDP Growth Forecast? - 28th July 10
Gold Counting Down to Assault on $1300 - 28th July 10
America's Vision: National Capitalism - 28th July 10
European Sovereign Debt Crisis, Running Through a Minefield Backwards - 27th July 10
Gold, Hoping for a Break - 27th July 10
Stock Market Take-Off Tuesday Already? - 27th July 10
The Unlimited Power of Suppressing the Interest Rate - 27th July 10
Should the Fed Pump Even More Money? - 27th July 10
Is the Star in Starbucks Fading? - 27th July 10
Nasty MLP ETF Indicator Flashing Investor Warning Signal Again - 27th July 10
NAFTA Has Resulted in Increased U.S. Unemployment - 27th July 10
WikiLeaks Exposes Imperialist War in Afghanistan - 27th July 10
A Decade of Falling House Prices - 27th July 10
The Continuing Crisis in the New World Order - 27th July 10
WikiLeaks and the Afghan War - 27th July 10
BP Hopes for a CEO Savior in American Robert Dudley - 27th July 10
Will China Grab the Credit-Rating Business? - 27th July 10
Unemployment is Worse Than We Know, Economic Recovery Challenge Harder Than We Think - 27th July 10
Plausible Gulf Oil Spill Scenario: Underground Blowout and Mudflow - 27th July 10
The 'I's' of the Illuminati - 27th July 10
Good Potential in Junior Gold Miners - 27th July 10
Three Emerging Economies Bucking the Depression Downtrend - 26th July 10
U.S. Financial Reform Bill is 2300 Pages of Gobbledygook - 26th July 10
Crude Oil and Natural Gas Trading Using Technical's or Fundamentals, Which is Better? - 26th July 10
The Deflationary Cycle Full Monty, Eight Risks That Will Cause Deflation - 26th July 10
Stocks Search for Direction Post Bank Stress Tests - 26th July 10
Crude Oil Headed Unimaginably Higher! - 26th July 10
Four Shocking Economic Bombshells Bernanke Did NOT Tell Congress About Last Week - 26th July 10
China Stock Market Ready to Surge 50%: Part II - 26th July 10
Why Second Quarter Corporate Earnings Haven’t Spurred a Stock Market Rally - 26th July 10
Stocks Stuck in Trading Range Despite Positive Corporate Earnings Reports - 26th July 10
The Illuson of Economic Recovery, Major Indicators Point Towards Further Collapse - 26th July 10
Money Supply Divergence TMS1 vs. TMS2 vs. M2, What does it Mean? - 26th July 10
The Breakup of the United States - 26th July 10
Inflation, The Coming Rice in Prices - 26th July 10
Stocks, Commodities and Financial Markets, The Shape of Things to Come - 25th July 10
Yes, You Can Time the Market – Here’s How! - 25th July 10
Mid 2010 Investment and Economic Thought - 25th July 10
SP-500, GLD and GDX Investor Sentiment Trumps Everything - 25th July 10
Charting the Stock Market is Similar to Tracking a Squirrel Crossing a Busy Street - 25th July 10
Stocks Bull Markets Generate Economic Growth - 25th July 10
Metals Investing in Burkina Faso, The Land of Upright People - 25th July 10
U.S. is Insolvent and Faces Bankruptcy as a Pure Debtor Nation - 25th July 10
Obama Preparing to Attack Iran - 25th July 10
U.S. Taxpayers the Largest Source of Taliban Revenue - 25th July 10
Credit Based on Consumption Not Savings, Real Bills Revisted - 25th July 10
Thoughts on the Economy - 25th July 10
Positive European Bank Stress Tests Sending Markets Higher - 25th July 10
The Golden Chalice and Gold’s Greatest Correction Since 1980 - 25th July 10
Wages and Subsistence - 24th July 10
Why Currencies Play an Important Role in Corporate Earnings - 24th July 10
Elements of Deflation and the Super-Trend Puzzle - 24th July 10
Making Sense of the Economic Puzzle - 24th July 10
Statistical View of Price Ranges for U.S. and China Stock Markets - 24th July 10
NATO Pulls Pakistan Into Its Global Network - 24th July 10
U.S. Jobless Claims and Housing Market Data Point to Worsening Economy - 24th July 10
U.S. Need Not Fear Sovereign Debt Crisis, Unlike Greece, It Actually Is Sovereign - 24th July 10
Shadow Banking Makes A Comeback - 24th July 10
U.S. Economy Never Came Out of Recession, Pray and Hold onto Gold - 24th July 10
Gold BubbleOmics Revisited - 23rd July 10
Gold Market Spooked by Deflationary Double-Dip Recession Fears - 23rd July 10
U.S. Dollar's Never-Ending Plunge and Its Gold Consequences - 23rd July 10
Gold and Silver For Investor Profit and Protection - 23rd July 10
Credit Deflation Lands in Britain - 23rd July 10
Gold Diverging Trend From Weak U.S. Monetary Inflation - 23rd July 10
Markets Stressful Finish To The Week - 23rd July 10
Oil Stocks XOI Undervalued - 23rd July 10
The Strategic Ramifications of a US-Led Withdrawal from Afghanistan - 23rd July 10
A Battle Royal in the S&P 500 Stocks Index - 23rd July 10
Gold Market Manipulation, Swaps Signal the Roadmap Ahead, BIS The Super SIV Solution - 23rd July 10
UK Stealth Economic Boom, GDP 1.1% Growth Catches Press and Academic Economists By Surprise - 23rd July 10
Three Dividend Stealth Stocks - 23rd July 10
Mortgage Debt … Credit Card Debt … Corporate Debt — It’s all Shrinking! - 23rd July 10
U.S. House Price Forecast 2010 to 2015 - 23rd July 10
Hungary Could Trigger Next Sovereign Debt and Credit Crisis Event - 23rd July 10
How to Buy Gold - 23rd July 10
Signing Financial Reform Is Signing Up For A New Struggle To Make It Real - 23rd July 10
Plan For America To Control Federal Deficit Spending - 23rd July 10

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

Robert Prechter's Stock Market Forecast to 2016

Stock Market Bounce No Follow Through...

Stock-Markets / Stock Index Trading Feb 08, 2010 - 05:10 PM

By: Jack_Steiman

Stock-Markets

Best Financial Markets Analysis ArticleAnd that's what everyone was expecting after that wonderful hammer on all the critical index charts in the last hour on Friday. The S&P 500 touched the 200-day exponential moving average at 1046 (1044 print) and then burst higher. It was the first test in an extremely long time and after losing the 20- and 50-day exponential moving averages, one would think that whichever index got down to the 200-day exponential moving average first would give the market a quick blast higher and that's what happened.


The key is following through on the next day’s action. Does it follow through or just die? It simply died today. It didn't get killed. Nothing bad like that, but where's the follow through that should take place? It was nowhere to be found today. Not what the bulls want to see and puts the recent down trend more in focus. We had the breakdown and retest and then follow through lower. Today we didn't get a follow through higher one would expect and thus the down trend remains confirmed. Yes, things can reverse but the onus is on the bulls to make that reversal a reality. The bears control things for now.

After the close on Friday, it was reasonable to expect the overseas markets rally higher. When they rally higher it basically always boosts our futures allowing for a gap up out of the gate. Asia had no rally and Europe was surprisingly flat. No big rally overseas led to flat to slightly down futures on our end. No gap up to be found.

After falling early, led by the Dow, the market came back strong, erasing a 70-point loss in the Dow. The Nasdaq went very green, up around 10 points. The S&P 500 also went green. It did not last. Once the market got back those losses, the bears took over and caused a slow but steady turn downward as the day went along. It accelerated in the last hour, allowing all the major indexes to close on their lows. Very poor action for the short-term. The bears stepped up when they had to no doubt. The bulls did not.

The hammer from Friday now a thing of the past. The action today does not mean we fall apart. The closer the indexes get to their 200-day exponential moving averages, the harder it will be for the bears to hold off the fighting bulls who will give all they have to protect those critical 200-day exponential moving averages. A deep close below those 200's across the board open up the bear market conversation. For now all we know is that we're in a down trend that was confirmed when we back tested those lost 20- and 50-day exponential moving averages. From there we continue to fall gradually. The bulls need to now focus on protecting those 200's below current price.

There is a pattern worth noting when markets are in more of a down trend. You often see some early day strength that turns to a churn that ultimately turns to late day selling. This is the pattern that's starting to emerge with more regularity. When the market was rocking in bull mode, we saw some early selling turn in to late day buying. That's when you know you're in a bull. Folks can't wait to buy up weakness. Now we are seeing folks anxious to remove themselves from stocks once we head higher. A change of character worth noting for now. It can reverse back at any time but worth noting as we can watch to see how long this overall process continues, especially if we ever lose those 200-days across the board. If those ever do get taken out, this process of late day weakness will become common place.

We saw some terrible action from the financial stocks today, and in particular, I am watching the action from Citigroup (C). It is now trading at the poorly priced IPO secondary. It was supposed to price at 3.50, but eventually priced at 3.15. It traded down to intra-day 3.13 before rallying back some weeks back. Today was its lowest close in this down turn since the secondary and a close below 3.13 opens the door to much lower prices not only for the stock but the financials and thus likely for the market. Bank Of America (BAC) along with Wells Fargo (WFC) also had terrible days today. JP Morgan Chase (JPM) also struggled although not as badly as those just mentioned. Bottom line is the financials were awful today and when that happens as we near critical market support (200-day EMA's), we have to watch carefully. The financials need to hold here or things will get more than interesting.

We had the first close below Dow 10,000 in quite some time today and the first time since it started to fall from just over 10,700. It has found a way to hold above and losing 10,000 isn't necessarily a bad thing as it's still above those 200's, but it is psychologically damaging to some degree. The bull market carried the Dow over 10,000 and ever since it has been a feel good story to have the Dow back above the 5-digit mark. If it stays below for a while, it will start to become very difficult resistance on any bounce back up.

The real line in the sand for this market is those critical 200-day exponential moving averages currently at 9768 on the Dow. The levels on the S&P 500 and Nasdaq are 1046/2062 respectively. Those levels now become the key to this market future, although, we know they change slightly from day to day. The bulls have their work cut out for them as do the bears. Both sides will struggle to do their work necessary to have their side in total control. The bulls need to ultimately get back through gap and 20/50-day resistance but for now they are more focused on holding the 200's.

Play it slow and safe here, please.

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 21-Day Trial to SwingTradeOnline.com!

© 2010 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.


© 2005-2010 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments


Post Comment (Moderated)




(Note Commenting Issue: If after Submitting you are returned to the Main Index Page then due to site caching your comment has not been accepted. Solution - Click the Browser Back Button to the article page and Press PAGE REFRESH (you should see the message "You are not authorized to carry out this operation") Now re-enter your comment (ignoring the notice) - If all's well then you will remain on the article page after submitting, a moderator will check and authorise the comment. Alternatively EMAIL to comments @ marketoracle.co.uk , quoting the article number.

FREE Deflation Survival GuideFREE Updated 118 Page Independant Investor E-book