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
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24
RECESSION When Yield Curve Uninverts - 8th Sep 24
Sentiment Speaks: Silver Is Set Up To Shine - 8th Sep 24
Precious Metals Shine in August: Gold and Silver Surge Ahead - 8th Sep 24
Gold’s Demand Comeback - 8th Sep 24
Gold’s Quick Reversal and Copper’s Major Indications - 8th Sep 24
GLOBAL WARMING Housing Market Consequences Right Now - 6th Sep 24
Crude Oil’s Sign for Gold Investors - 6th Sep 24
Stocks Face Uncertainty Following Sell-Off- 6th Sep 24
GOLD WILL CONTINUE TO OUTPERFORM MINING SHARES - 6th Sep 24
AI Stocks Portfolio and Bitcoin September 2024 - 3rd Sep 24
2024 = 1984 - AI Equals Loss of Agency - 30th Aug 24
UBI - Universal Billionaire Income - 30th Aug 24
US COUNTING DOWN TO CRISIS, CATASTROPHE AND COLLAPSE - 30th Aug 24
GBP/USD Uptrend: What’s Next for the Pair? - 30th Aug 24
The Post-2020 History of the 10-2 US Treasury Yield Curve - 30th Aug 24
Stocks Likely to Extend Consolidation: Topping Pattern Forming? - 30th Aug 24
Why Stock-Market Success Is Usually Only Temporary - 30th Aug 24
The Consequences of AI - 24th Aug 24
Can Greedy Politicians Really Stop Price Inflation With a "Price Gouging" Ban? - 24th Aug 24
Why Alien Intelligence Cannot Predict the Future - 23rd Aug 24
Stock Market Surefire Way to Go Broke - 23rd Aug 24
RIP Google Search - 23rd Aug 24
What happened to the Fed’s Gold? - 23rd Aug 24
US Dollar Reserves Have Dropped By 14 Percent Since 2002 - 23rd Aug 24
Will Electric Vehicles Be the Killer App for Silver? - 23rd Aug 24
EUR/USD Update: Strong Uptrend and Key Levels to Watch - 23rd Aug 24
Gold Mid-Tier Mining Stocks Fundamentals - 23rd Aug 24
My GCSE Exam Results Day Shock! 2024 - 23rd Aug 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Struggling...Hanging In...

Stock-Markets / Stock Markets 2010 Dec 16, 2010 - 04:09 AM GMT

By: Jack_Steiman

Stock-Markets

What other words could you possibly use now is how I see it. It's struggling for a good reason. We have some difficult sentiment issues to deal with. A low 10-day put-call reading and a high bull-bear spread at 36% more bulls. When these forces come together it can take a bull market and force a pullback within it at any moment. No way to predict the moment, but you start to see more and more days of up at the beginning of the day, and then a real struggle at the end of it. Nothing horrific, but just more of a struggle each and every day for continuous upside action. This is not bad news for the market as it allows things to unwind more quickly, although a more sustained pullback can occur here due to those sentiment issues.


The daily charts are close to overbought, although not quite and the 60-minute charts were overbought, but are now getting closer to oversold. The daily charts could really use more selling, but it's hard to say exactly how it unfolds. It could be a slow gradual move lower due to favorable seasonality, or all of that can be thrown out the window with the market plummeting rather quickly to ratchet up fear more rapidly. With the overall market still on a bigger picture buy signal it's very hard to understand how the selling will unfold.

Bottom line is we're seeing a change of character with this market with the later selling after early upside action, and this often is a warning sign that deeper selling is around the corner, although it doesn't have to play out that way. It can still be more of a choppy type action that brings things lower over the coming weeks. Again, I remind you the bigger picture remains positive, thus, some selling can be construed as a positive as it helps new plays set up over time. For me, that's a real good thing. Instead of having trouble finding decent set ups it tells me that will become normal.

I have been asked why I think the selling to come from the sentiment problems, whenever it does kick in, will only be a pullback to be bought. What I try to do is use the oscillators from the previous upward trend and understand what is to come after the selling. If the market was indeed on its last leg, as the expression goes, then it seems unlikely to me that the oscillators would have been surging up as hard as they did.

It seems likely that they would have lagged badly, and flashed a big red flag, but overall they did not. Not to say they were perfect for they were not, but they were very strong overall. This suggests to me that once the selling starts it'll afford a better opportunity to buy down the road and the selling should actually be welcomed so more and more types of set-ups can take place in varying sectors of this market, rather than from just one or two, when things are more difficult such as they are now.

When markets are such as they are now all you can really do is play base set-ups, or strong pullback candidates, who have seen their daily oscillators unwind quite a ways lower. Buying frothy stocks up here that are on high poles have not worked lately. Some big time plays in that arena have been hit very hard the past few days to weeks.

Stocks such as F5 Networks, Inc. (FFIV), Netflix, Inc. (NFLX), Priceline.com Incorporated (PCLN) and Chipotle Mexican Grill, Inc. (CMG) to name just a few. High volume at the top is typical as the retail masses look to get in just as it tops out leaving these playing in deep holes, which makes for bad exits. Avoid these types and don't get sucked in on their rallies. Try to keep it more appropriate for the short-term. This may take quite a bit more time to play out, thus, extreme patience may be needed.

I'm keeping a close eye on those financials to see just what kind of guts they have, or don't. They really need to show out performance as things float about here. The Direxion Daily Financial Bull 3X Shares (FAS) needs to hold 24.00. If it can do that it would go a long way to helping the market recover back up once the market does what it needs to unwind overbought and too many bulls. The laggards that have come alive need to hold on to their breakout points. If they were to lose them again it wouldn't be the best behavior, and the bears would seize on those stocks to keep the market levels down. An important area to focus on from a learning perspective for sure.

You can learn a lot about a market's future intentions by watching one or two key sector charts. This is the sector to focus on. Always keeping an eye on the PowerShares DB US Dollar Index Bullish (UUP), or dollar chart as well. Keep it light here for now folks. 30% exposure is the most you should have here.

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