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
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
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 Black..Excellent Action For The Bulls But Nas Lags....

Stock-Markets / Stock Markets 2010 Jul 08, 2010 - 05:35 PM GMT

By: Jack_Steiman


We gapped up today after yesterday's big move higher. This was critical for the bulls in that they needed to show follow-through from their big day yesterday. The fact that they gapped things up today was very interesting. A gap up in to the gap existing at Standard & Poor's Depositary Receipts (SPY) 1060. That's not how bear markets behave. You don't gap up in to a pre-existing gap down.

The gap did get filled, which allowed the bears to breathe a sigh of relief. But the truth is, we held that 1060 gap up all day and finished powerfully over the last fifteen minutes of action, allowing the markets to finish pretty much at the highs. A gap up that holds late day and erases all of the intra day black candles can only be looked upon as bullish action. There's no way to spin that bearish. With the close being so strong it took us to overbought at the close, thus some unwinding will be necessary to bring down those 60-minute oscillators, but score a victory for the bulls today. A slam dunk victory at that.

So now we look for red flags to say why it wasn't perfect. Hey, I have to cover all angels. The Nasdaq lagged all day, finishing on a percentage basis well below the gains of the S&P 500 and Dow, which is not the best of all worlds for the bulls. The Nasdaq should lead, and over the past two days it has lagged, but that can be corrected quick enough. The only thing is how much it lagged, and it was significant. A full half percent with an advance/decline line nowhere as good as the NYSE. Again, as long as this can be fixed in short order it's nothing major, but lagging for two straight days isn't the best of behaviors. On the next move up it's essential to see the Nasdaq stocks rock higher and put the Dow and S&P 500 stocks to bed. Other than this bifurcation there is nothing else to say things weren't as good as the actual price action was.

The 60-minute charts are overbought. Pretty much 70 RSI readings at the close of trading. A hair below on some index charts but overall pretty much 70 across the board. It can get over 70 but a drop but sooner than later will need to unwind. It can do so with some lateral moves for a day or two but some erosion of price is likely. With 1060 the gap today, we may not be able to get much below this support level as things cool off so the bulls can try higher. Sixty minute unwinding can occur quite rapidly so you don't want to get too far away from the action. The RSI's may not get far below 50 on those 60-charts as well thus you have to be around and watch things quite closely. Once the trend begins to change, RSI 50 on those short-term charts is about it for any sustained downside action. The S&P 500 closed three points over the 20-day exponential moving average.

Not far enough away to say it's clean. Add the overbought conditions and my guess is we'll trade back below it tomorrow. The Nasdaq has the 20-day exponential moving average and a gap at roughly 2185 on average between the two. Strong resistance just above. It seems it would be asking far too much for these indexes to clear through cleanly while this overbought on the short-term charts. Strong resistance at overbought is never a time to buy too much which is why we definitely need those short term oscillators to head lower before considering long purchases.

It seems as though the short-term is being ruled by the levels of pessimism that have crept in. Earnings haven't been good in the early going and will need to improve dramatically as things get going on Monday. However, sentiment is on the side of the bulls and thus pretty much a stalemate exists until we can see earnings really blast up. We'll have to see what we get over the next many weeks but I don't think earnings are going to be very strong overall. Short-term we have a market that wants higher but beyond that things are unclear until we can see what the earnings will tell 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.

© 2005-2022 - 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