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
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
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 Nothing Good Here....Rejection At Gap Resistance....

Stock-Markets / Stock Markets 2010 May 27, 2010 - 01:06 AM GMT

By: Jack_Steiman

Stock-Markets

Yesterday showed a fourth gap down off the top at 1220 S&P 500. Fourth gaps are often the place where we see exhaustion in a down pattern. Where down trends go to die for a short period of time. That short period of time was a half-day of upside action. How incredibly sad is that!!


The market gapped up off the strong reversal hammer printed yesterday. There was no way to think that once the gap up was in place that it would just die out as the day wore on, but that's exactly what took place. Slowly, and then not so slowly, the market gave it up. It tried numerous times to rally back up, but each buying episode was met with an equal or greater selling program. The markets went from very green to very red as we closed for the day. Slightly off the lows but nasty overall action with the bears showing they are fully in control of the action. Bear market action continues for now with today's horrific reversal down.

So what was the culprit you ask that stopped this market dead in its tracks. The answer can be seen in some of tonight's charts. Gaps! When markets are in strong down trends, whether it's a bear market or not, gaps are often the place rallies go to die. And die it did. The S&P 500 has a gap 1100 but all it could muster would be 1091. Couldn't even make it up to the gap. The Nasdaq, however, did out perform and made it through the bottom of its gap at 2250. The top is at 2270. It made it up to 2257 and then died hard and fast. It fell 62 points or 3% off the days highs. Amazing! No mercy.

The bears pounced on the gap and sent a message that these levels now belong to them, not the bulls any more. The tide has turned.

In the bull run just past, the bulls had no trouble eliminating those gaps with ease. Sometimes on the first try but always by the second attempt. Now they all fail badly with the new owners of the gaps being the bears. That's the new reality we all have to accept.

The gap stopped this market dead in its tracks and thus 1100 and 2250 are massive levels of resistance.

The PowerShares QQQ (QQQQ) chart, or the proxy for the NDX 100, has a broken chart when the trend line broke, now sitting at 46.00. Every move back up towards that level gets rejected hard. Notice on the QQQQ chart below, the two back tests with long tails off that $46 trend line over the past few days. Again, this is what a bear market looks like. Multiple tests of broken support that gets back tested but fails in short order.

Notice also that the breakdown occurred with a gap down. Not good news for the bulls. Study it tonight. Notice those tails. This is what's so negative for the market right here. A bull market wouldn't tail. It would close right at that trend line and then gap over as a new day for trading begun shortly thereafter. Trend lines are just another weapon, once broken, that the bears will seize on such as they have the past few days.

When markets are bearish they tend to shoot off false signals on the short-term charts. Well, not always completely false but here's what I mean. The 60-minute charts will often throw off positive divergences. Sometimes they work for only a day or less and sometimes not at all. In a bull market they last for many days, but in bearish trending markets, like I just said, they either don't work at all or for much shorter periods of time than what we've become accustomed to in the recent past when the bull was raging on. If you choose to play them as they set up, please make note of that and so if you get fortunate enough to catch it right the next morning, Don't hesitate to at least take something off the table.

Look folks, let's be straight up here. The market is showing more and more of a tendency to fall at all levels of resistance from underneath. It's showing bearish action and this must not be denied by anyone at this time or it'll likely cause you some serious financial pain, if it hasn't already. Please adhere to the warning signals that are out there. Many keep screaming the bull is still in good shape and that all this selling makes no sense while causing you more and more financial losses in the process if you've been listening to them. Tune out the noise folks. Play what you see, not what you wish were true or hope will be true. If things turn we'll adjust back to being bullish, but for now you have to respect the message, and it says things are not very bullish for now

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.


© 2005-2022 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