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Stock Market Sends A Loud Message For All To Hear.....

Stock-Markets / Stock Markets 2011 Jul 28, 2011 - 03:55 AM GMT

By: Jack_Steiman

Stock-Markets Best Financial Markets Analysis ArticleThe market is telling the world to listen up carefully. Don't be foolish. Get your act together. Work together. Lose your egos. Do what's right for the American people, or the market will tell you just how wrong you got things. The Democrats and the Republicans need to find a way to work together now, and stop the daring behavior. Stop waiting for the other side to blink, so you can say you won. It's not about you. It's about the people you represent, although that's clearly not how they're thinking at the moment. The market is digesting a lot of bad news from today alone on the economic front let alone having to deal with what's going on with our government and their inability to do what's right for everyone.


We woke up to hear durable good were negative for the past month when the numbers were supposed to come in with a small positive figure. Then the beige book came out with two hours left in the trading day, and it showed a huge decline in economic activity in eight of the twelve areas covered. That's bad enough. When today was all said and done the market said we've had enough of things going as they are with the two sides at odds with each other, and seemingly, not looking to work well together. Any additional behavior such as this will not be received well by Wall Street, so the market is simply saying get it together now boys and girls, or pay the price for the people you're representing.

The market hangs on every piece of news out there with regards to the debt ceiling. Even a piece of news saying the two sides may work together brings about a rally. However, any small piece of news that's negative also brings about selling. Each day that ticks away seemingly gets the market more anxious, and quite frankly, less tolerant of the behavior taking place between the two sides. It was acting very tolerant for a while there, but once we got to within ten days of the August second deadline, it has grown increasingly angry as it sends its message to anyone who will listen. No more breaks and no more waiting.

The market wants a package that has all the right ingredients on the table now. Not tomorrow. NOW!!! The market is not pricing in the down side many think it is. All that's happening here is the market saying get it together. If you want to see what type of down side is available on the wrong news, you may not have to wait long, and you'll probably be shocked as to how bad it will be. It won't be pretty folks. Tomorrow, Friday, and Monday is all that's left in terms of trading days before the deadline arrives on Tuesday the 2nd. The market feels that this has gone on way too long without resolution. This is nail biting time. Is anyone listening?

As expected, the two areas where there was no mercy today was in the semiconductors, and yes, you guessed it, the financials. Huge moves lower as the economy is weakening, and that always hits the semiconductor stocks. When we're facing financial disasters you can always count on those horrific financial stocks getting crushed. Today was no exception. The technical trends turning down appreciably. These two sectors will continue to lead down whenever there's bad economic news, or simply bad news on the debt ceiling front. This does not, however, exclude many other areas getting smoked these past few days. It's pretty wide spread throughout the market.

There's really no place to hide other than precious metal, and even they threw some poor candles today. It looks as if everything is deflating out. Inflation is a problem in the moment, but won't be much longer if this process continues onward as it appears it will, especially if we default. I know defaulting seems unthinkable, but its part of our landscape now. Industrials got killed today. Transports got killed today. Again, nowhere to really run and hide these past few days. Semiconductors and financials may be the worst, but nothing is really any good right now.

Another subject worth noting is how stocks are reacting to earnings news. Some are definitely being rewarded, but many are getting absolutely crushed as well. All over the market we're seeing massive moves lower. Far too many to name, but some huge leaders such as Caterpillar Inc. (CAT), Ford Motor Co. (F), Panera Bread Co. (PNRA), Illumina Inc. (ILMN), CH Robinson Worldwide Inc. (CHRW), NetLogic Microsystems Inc. (NETL), and the list goes on and on. In the past, and in most bull markets, these types of annihilations don't take place. Stocks get a pass for the most part. Down some, sure, but not like these stocks are being hit. Many moves down over 105 in a day. Some over 20% in a day, and no hollow candles to say they're possibly bottoming.

There are many red flags out there, and we all need to make sure were listening.
We lost key 1330 support and flirted with losing the bottom of an open gap with the top at 1313 and the bottom at 1306. We closed at 1304, but that's still a hold. That doesn't mean we hold tomorrow. Every day that goes by with no good news on the debt ceiling front opens the door to something bad happening to our markets, and thus, testing 1249 once again on the S&P 500, which desperately needs to hold. Interesting times for sure, and thus, must play very defensively for a while longer until things become much clearer.

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.

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