Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Trump Stocks and Crypto Mania 2025 Incoming as Bitcoin Breaks Above $100k - 8th Dec 24
Gold Price Multiple Confirmations - Are You Ready? - 8th Dec 24
Gold Price Monster Upleg Lives - 8th Dec 24
Stock & Crypto Markets Going into December 2024 - 2nd Dec 24
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Basing Out Below S&P 500 1160...

Stock-Markets / Stock Markets 2010 Sep 30, 2010 - 02:11 AM GMT

By: Jack_Steiman

Stock-Markets

By no means does that guarantee that the S&P 500 will ever break through this critical long-term down trend line that would send the bears running for the hills, if it ever did make the move. We have the GDP Report tomorrow along with jobless claims. Two huge reports that tells the market where things are on Main Street. A good report from either one can be a strong catalyst to getting closer to that holy grail of levels at 1160. But if both come in poorly, it will take the market down and test that critical 1131 all over again. That would be third time it does so over the short-term and wouldn't be the very best of behaviors for the bulls.


The market is playing off of each report and wants real evidence, it seems, that things are improving before blasting through 1160 on the S&P 500. Neither side probably feels real comfortable about things right here. Think about it. The bulls know they've had a strong run up off of the sentiment readings a few months back. That trade is over for now as things are neutral in that arena. The bulls know they need real good news for this market to make the next leg higher. Without it they won't get what they're hoping for. The bears, on the other hand, know that things are getting too close for comfort with regards to S&P 500 1160. They know a few more good economic reports can get this market over that critical level of current resistance. Both sides are nervous and waiting. We'll get the news soon enough, not to mention the big jobs report a week from this Friday.

Whenever a market is running higher you have to look for possible red flags that could put an end to that run up higher. You need to look no further than the financial's. The red flag is ten feet high and twenty feet wide there. Those stocks are in poor shape at best. The leaders, Wells Fargo & Company (WFC), JPMorgan Chase & Co. (JPM), Morgan Stanley (MS) and Goldman Sachs (GS) are all breaking down out of bear flags. One by one. Now, it's not too late for them as none of them have made new recent lows. But time is running out for them. They need to get their act together now.

The bulls did remove one of those red flags with the recent action in those semiconductor stocks, which are doing very well. If the financial's can start to bid then there's a reasonable chance that we'll get through 1160. It won't be easy for sure. The next few days to weeks will tell the tale about whether the financial's ever get their act together and allow the market to move appreciably higher.

The Nasdaq continues to lead, and this is a necessary component to future success for the entire stock market. If you look at the PowerShares QQQ (QQQQ), or the NDX, or even the COMP, you can see their index charts have more overbought oscillators than the other key market sectors. That's what you want to see if you're bullish. The risk trade being the way traders want to go. If they want low beta and lower risk it's not a good sign for the future, thus, the news is good from this perspective.

RSI's are near, or slightly above, 70 on the daily charts when we study the higher beta trade. They are at roughly 63 on the lower risk trade. Perfect action, really, for the bulls, but no guarantee it leads to a 1160 S&P 500 breakout, as again, the financial's must get going. 70 RSI's usually lead to pullback's on a daily chart, but because the S&P 500 and Dow are not overbought, it may allow the tech stocks to remain overbought a bit longer, thus, allowing the other sectors to get overbought first as well before a more prolonged pullback takes place.

Apple Inc. (AAPL) pulled back 17$ in roughly five minutes yesterday when the overbought nature of the stock finally kicked in. A gentle reminder of what's possible when you buy stocks on a high pole that have not properly unwound. Scary how fast euphoria can turn to fright. It recovered, but be forewarned of what's possible, and that you should never play from greed. Play appropriately.
Remember that this is the toughest game in the world. That it can eat you up in minutes if you start to do things from a greed perspective. Keep it real folks. Go for those singles, doubles, and occasionally, more when you get fortunate enough. Even though a lot of these seem to keep going, you want to be sure to understand the risk. A day at a time as we hang around just below 1160 on the S&P 500.

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 constitutinginvestment 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