Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
How Binance SCAMs Crypto Traders with UP DOWN Coins, Futures, Options and Leverage - Don't Get Bogdanoffed! - 20th Jun 21
Smart Money Accumulating Physical Silver Ahead Of New Basel III Regulations And Price Explosion To $44 - 20th Jun 21
Rambling Fed Triggers Gold/Silver Correction: Are Investors Being Duped? - 20th Jun 21
Gold: The Fed Wreaked Havoc on the Precious Metals - 20th Jun 21
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

S&P 500 Loses 1150 in Crash, Panic, Confusion...Error?

Stock-Markets / Stock Index Trading May 07, 2010 - 12:19 AM GMT

By: Jack_Steiman

Stock-Markets

Best Financial Markets Analysis ArticleToday was a day I'll never forget. The most interesting day in my market life. What can one say when a market falls 1000 points on the Dow. Let's go over the set-up and how things worked out. What we can take from today ultimately.


We gapped down at the open today. The market (S&P 500) was working its way down towards 1150 or the line between bull-market and bear-market. We hit 1150 and bounced hard in a matter of minutes to 1159. It stopped there and worked its way down towards 1150 once again. It churned. It churned some more. Smaller bounces this time. An ominous sign. Slowly but surely we started to move below 1150. Every single institution on planet earth knew of the importance of this level.

As we fell further to the lower 1140's, I personally believe this kicked in a massive sell signal that the institutions responded to in a big way and flooded the market with massive sells. I believe this is what caused the selling that ran the market down 1000 points. No mistakes. No errors. Nice excuses but the reality is the massive sell signal flashed by losing 1150, and kicked in major institutional selling. Short covering ran the markets back up but in the end it was still a nasty day with the Dow down 347 points.

The S&P 500 fell 37 and the Nasdaq 82. The S&P 500 closed at 1128. A full 2% below that critical support at 1150. That is the bottom line. I don't care at this moment that we rallied back nicely. The bottom line is, we lost massive support and did so on massive volume rarely, if ever, seen before on some horrific market internals. A bad day for the bulls and a celebration day for the bears. Yes, there is some question on things based on the late 650 point rally, but again, it's still more about losing 1150 S&P 500.

So what about those internals. 4.4 billion shares on the Nasdaq. That's called, get me out, volume because we broke major support. In addition, you want to look and see how many stocks were down-to-up and on that level, no one can claim anything bullish about today's action. 11/1. Yes, that's 11 stocks down for every 1 stock up on the NYSE. It was 6 down to every 1 up on the Nasdaq. Hardly a reason for optimism.

If the numbers had been in line in terms of not being severe, say 3/1 or 2/1, then today could be taken with a grain of salt to some degree, but when you see 11/1 and 6/1, the reality is, it's get me out of stocks time. No bull can argue that today was an error when 11 out of 12 stocks fell on the NYSE. We have to respect the message being sent and today's message was we are now broken short-term but still above the 200-day exponential moving averages. Not that this is any real good news, but at least it's something the bulls can try to play spin doctor with for a while.

It didn't help the markets cause when CNBC was showing coverage of rioting in the streets in Greece. We saw bombs going off with fires burning. We saw people attacking the police and the police then fighting back suddenly and violently. Police using their sticks to hit people with the intent to injure. Not just little taps but full swings. A real riot, and that can never be good for a markets sentiment.

An amazing watch, but it shows just how bad things are around the world and the potential headaches this can cause other economies throughout the world, including our own. The markets around the world are responding to this mess and most of them had broken down a week or so ago. We were the last market to hold up. Today we joined the rest of the world. We had sent charts the past few days showing the breakdowns in different world markets. Now we're all broken down together.

When we look at the daily charts of the key indexes, we can see that although they are near oversold, even with today's action, they are not truly oversold. If they come close to getting as oversold as they were overbought, it could be quite some time before things turn back up. I'm not saying that'll be the case, but remember, now that we're broken, you have to understand that it is possible that we could get far more selling before things get to the point where buying will kick in from being just too oversold.

The rubber band took an incredibly long time to snap from overbought and because we're not even truly oversold yet. We have plenty of room for downside action if the market wants it. Stochastic's are averaging 21 and RSI's 33. They can go to 0/10 and 20/25 if they want, so please don't think we're too oversold for further downside movement. We're not at all. Doesn't mean that we will fall, but the oscillators are not saying buy me.

Today is still a bit confusing. We have to respect, on some at least, that we did bounce back 650 points on the Dow off the lows. It can signify some form of capitulation. However, we could spend months moving back down those long tails created today meaning more overall downside to come in the months ahead. You won't likely see anything like today again.

However, it doesn't mean anything good is coming for the bulls now. The worst may be over but that doesn't mean the selling is done by any means. For me, I have much to learn in the days to come. CASH is the ONLY way to play right now. Can't guess now. I need to see the markets behavior over the coming days to clarify today's action. Patience is an absolute must now. Please exercise it. This is unprecedented action. I have much to learn to gain the proper insight.

All I know for now that's certain is the S&P 500 lost 1150 on a closing basis and thus the up trend line off the lows is now officially gone. That's bearish action. No other way around that reality. Don't brush it off as being unimportant. It is extremely relevant and needs to be respected fully. Like I said, it'll take a few days of action for things to become clearer to me, but there's no arguing the breakdown for the moment. It's real and now the onus shifts to the bulls to see if they're capable of taking back 1150 on a closing basis with force. We move along here VERY slowly.

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.


© 2005-2019 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