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
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

Debt Fears...Sentiment...Stock Market Lower....Nothing From Nothing....

Stock-Markets / Stock Markets 2011 Apr 19, 2011 - 05:36 AM GMT

By: Jack_Steiman

Stock-Markets

The market uses excuses to get its dirty work done. It tells you when things need to happen by using news to move in a certain direction, even if that same news a month or so back would have done nothing to move it. When a market needs to get something done there is nothing you can do to stop it from happening. There was news today expressing some doubt as to whether the United States will be able to pay its debt. This same news has hit other countries with an initial sell off being bought heavily over time because their markets were bullish in nature. The news really isn't anything new to anyone. We all know this by now, but again, the market needed to move lower and it used this excuse to get the job done. Sentiment is just too bullish short-term, and thus, the selling from news that would have had no effect not too long ago. The excuse. The catalyst if you will.


The excuse was given, and so we sold, but when you look at today you can see it really was nothing from nothing in terms of hurting the overall big picture bull market, which we are still in 100%. Don't let anyone else tell you otherwise. When the market goes down hard for a day or so, even if it's just intraday, fear ramps up. That's what the market is trying to accomplish. Ramp fear since it's very easy to do. Fear is the king of all emotions, so it takes no work by the market to get some going. A handle, or down period, does the trick in most instances. So today we got a strong gap down. The lows were reached early in the day, and then the market spent the rest of the day recovering as all bull markets do. This doesn't mean we can't go much lower. We can. Today, however, showed you why you don't short a bull market. Too tough to get any sustained downside action, even when sentiment is a real problem. You work that headache off in spurts. Nothing from nothing, bigger picture, like I said.

The one thing I have noticed thus far is that earnings have not been as strong as most would expect. A larger number of misses than I would have expected this early into this reporting quarter. But it is early, and most of the better companies have not stated their numbers quite yet. When they do in the coming days and weeks, I suspect things will take a turn for the better. The overall market is suggesting that will be the case. If the market thought earnings were going to be bad overall this reporting period, the market would be selling much harder than it is currently. The market, somehow, seems to know all things. Google Inc. (GOOG), and some others, which have been having some problems for a while now in terms of growth, is struggling.

When they missed, it was no shock to the market, even though the stock sold off very hard. The market was able to shake off their bad news. The market would have a much tougher time shaking off bad reports from the likes of Apple Inc. (AAPL) or Baidu, Inc. (BIDU). Apple's earnings are out Wednesday evening, and needs to be watched very closely for more market insight. If it's good you know the market will rock higher. If it's bad, will the market sell off, if so, how hard? It may not be as much as one would think, but we'll find out soon enough. Bull markets find a way to rotate around even when it appears it will get killed.

Now that the market is down about 3.5% off the Nasdaq highs, you'll start to hear more and more bears come out of hibernation. They'll tell you how things were out of control to the upside for no reason, and how this market will now find a way to begin the next bear move. This is fear and pessimism doing their thing. This is a normal response to the recent selling, especially on a day like today, even though today was really just a gnat of selling. Any excuse they can find to tell us how the bull is dead will come out in a big way now, especially if the selling continues to increase for a while to allow the bulls to cool down.

I would suggest you follow your hearts and do what feels right to you. If you think we're starting a bear, then you should respond that way. I would suggest you give the bull market the benefit of the doubt and try not to get caught up in all the negative banter. There is absolutely nothing bearish taking place right now. It's a positive that we're selling a tad here, and that's all it's been. This isn't selling folks.

Support is clear as can be. We lost the 50-day exponential moving averages today, but not by very much. They can be taken back quite easily, although it would be best if that didn't take place just from the perspective of keeping bearishness raised up for a while longer. I would like to see the bull-bear spread get down into the percentages in the 20's, and out of the 30's, especially that nasty 41.6% printed two weeks back. The 50-day is now at 2740 on the Nasdaq and 1307 on the S&P 500. The problem is we also have gap downs today, which will make a strong recapture very difficult, even if we get back over by a little bit. 1313 is that gap top and will be very tough resistance for the bulls, while it'll also be tough to just blow back through 1307.

Six points of tough resistance says easy on new long plays here. The Nasdaq has strong support at 2700 down to trend line at 2690. That's gap at 2700 to go along with trend line so only ten points separates strong support. Very tough for the bears to remove. We will likely continue to ping-pong around for some time with good nights of earnings followed by bad nights of earnings. This whipsaw will continue to erode bullishness, which is a very good thing for the bull's bigger picture. Hang in there and be patient.

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!

© 2011 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