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
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
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

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market RSI 30 Bounce On Cue...Now We Learn More....

Stock-Markets / Stock Markets 2010 Jul 08, 2010 - 01:54 AM GMT

By: Jack_Steiman


It has been occurring for years. When the daily index charts get down to 30 RSI we seemingly always see a strong bounce take place. We hit those magic 30 RSI levels yesterday on the lows with the Nasdaq printing 28 while the Dow and S&P 500 came in with readings at 30. No good news took place overnight, yet our futures started rising slowly but gradually throughout the morning. We opened with a small move higher that soon became a trend day for the bulls as the bears recognized they had nothing left in the tank. They covered their shorts in droves as the market marched higher. Once it became clear that 1040 wouldn't hold any longer the bears threw in the towel.

We cleared 1040 with ease late in the day and finished with a strong blast higher, which allowed the indexes to close right on their highs, just a few points below a gap at 1060 on the S&P 500. The magic that the RSI 30 gave to the bulls can ramp up bullish behavior rather quickly but the market remains in a down trend despite the day's action. That could change shortly, and I'll discuss how shortly, but for now the overall trend remains lower. The RSI 30 gave the market a strong bounce today that understandably is giving the bulls new hope for the future, however, they have a long way to go before things get bullish from a technical perspective.

The question we now ask is what is ahead of us. Trend up days are common in bad markets when the rubber band snaps from oversold. Today was surely one of those days, but it doesn't mean things are good. The bulls will have to clear through S&P 500 1060 and 1067, which is gap and the 20-day exponential moving average respectively. Neither one on its own merits would be an easy catch for the bulls. The fact that they're so close together, at the very least we should expect a pullback once we get there. Getting though such difficult resistance on the first shot is basically impossible although we know nothing is truly impossible in this game, but you catch my meaning. It's not likely thus a pullback is in the cards shortly. How we pull back is key to understanding future results for this market. We have to be open minded to all possibilities but for now we expect a pullback rather shortly here and from that selling we will learn much more.

Now we all know by now that this game called the stock market is rarely about the truth, but rather it's about how to play the game correctly. This means to ignore reality and play what makes this game move. Two things make this game move. Earnings and sentiment and on the latter, the bears took a bad hit today. The bull bear spread is down to 2.2% more bulls. Almost par and that's just not what the bears want to see. It's not at extremes yet but real close. 5-10% more bears is usually when things get too far on the dark side. 37% bulls and 34.8% bears equals our 2.2% spread. Ouch! if you're a bear. When extremes hit, it really doesn't matter what truth is out in the world. The market will simply stop falling and climb that silly expression called the wall of worry.

On this front the bears are rocking and that's bullish for the market. On the earnings front, so far the numbers have been poor at best with key stocks getting crushed on the reports so the bulls are definitely in trouble here. If you owned FedEx Corporation (FDX) or Best Buy Co. Inc. (BBY) or even Nike Inc. (NKE) or Bed Bath & Beyond, Inc. (BBBY) in the past two weeks, you know the pain the earnings reports have caused you. You're well under water on those plays. So now with the earnings season starting next week in full throttle, we will learn much more about the economy. The earnings, if somehow better, can push this market higher, but for now that doesn't seem to be what we should be expecting. Sentiment is on the side of the bulls but earnings are on the side of the bears. Stalemate.

If the bulls can power this market through S&P 500 1067, which means getting through a huge gap and the 20-day exponential moving average, they are in business short term. I don't think that's going to happen on this move up but anything is possible. At the very least we should fall some here but if the next pullback is weak and on light volume, the bulls will likely regain control of this market thus this is a very important time for the stock market. This is a critical learning time for all of us.



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 21-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.

08 Jul 10, 14:34
Most interesting comment I saw regarding the bounce was a throwaway by Ron Insana on a CNBC wrap-up show yesterday. He intimated that rising expectations of Republicans regaining Congressional majorities in November may be changing market sentiment. Seems a reach but - who knows? Actually that was the 2nd most interesting comment. The first was a few minutes earlier when Amanda Drury turned to the panel and asked "Double-D or not Double-D? What do you think?" Really. She did. Video clip linked here.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in