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
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
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

Nasty Stocks Bear Market Below S&P 1249 Continues

Stock-Markets / Stocks Bear Market Aug 21, 2011 - 08:21 AM GMT

By: Jack_Steiman

Stock-Markets

Best Financial Markets Analysis ArticleWe look for defining moments that tell us something has changed. That what was once one trend is now another, although it's hard to see it initially. It's about trusting those technicals that tell you where one market ended and another began. S&P 500 1249 was that level. Losing it lost the up trend line off the March 2009 lows. It also meant losing huge horizontal support, and the bottom of the big triangle in place at the time. It opened the door to much lower prices potentially, and that potential has been filled. I don't think anyone would deny that. It's been ugly since we lost S&P 500 1249. Some short-term rallies along the way, but the trend has been to sell and sell hard almost on a daily basis. Some monster days lower of 4% plus. One day like that is unusual enough. Multiple days like that tell you something is terribly wrong economically.


Markets are the best teacher. They don't lie. They don't know how. It sees what it sees and reacts to it. Today fit the new message. Oversold short-term sixty-minute charts doing nothing to help the bulls. Yes, we rallied hard off the morning gap down with the Dow getting up nearly one hundred points. Didn't last. As the day progressed the market started to fade. By the time we closed the market was down near the low with the Dow down 172 points. The Nasdaq lost 38 points with the S&P 500 chipping in 17. Ugly across the board. No blaming outside forces. Forget the options expiration excuse. It's simple. The market is following a bear market script. Large bounces will occur, but make no mistake about it. We lost 1249 a while back and that set into motion what we're dealing with today. An ugly, nasty bear market.

What set this market into bear mode is what most seem to be trying to figure out because most will tell you they just don't understand why the market is behaving so poorly. It's really rather easy. It's the economy. When the last ISM Manufacturing came out, we saw the market begin its nose dive. The number came in at no growth. One point above contraction when it was suppose to be reasonably higher than that. That started the snowball down the hill. It got bigger once we saw The Empire State Report show contraction.

It continued further still with the most recent existing home sales report, which missed expectations by a whopping 7.5%. Add in a poor Philadelphia fed, which was down right scary showing massive contraction. A dash of a bad CPI (consumer prices) and jobless claims, and you have enough bad news to last quite some time. Look, it would be nice to fantasize that things aren't so bad, but the deterioration in our economy plus the bad news coming in from Europe, where economies are even worse than ours, the recipe is there for a bad market for a time to come.

One of things that used to drive me nuts and still does is when CNBC marches out their pals who say the same thing over and over. All is well and for you long term investors, there's nothing to worry about. Just stay the course. Stocks are undervalued and I just can't understand the pessimism. What!!?? These folks don't ever tell you anything is bad because they need to be self serving and don't give a darn about any of you reading this letter tonight. I think it's near criminal to march people on who will tell everyone to buy when things are looking bad for themselves. There are lots of folks who don't know better and get sucked in, yet there's no penalty for their acts. It makes me sick.

When I had my radio show years back I used to talk about this stuff all the time. Nothing ever changes it seems. Probably never will sadly. The S&P 500 opened the new year at 1257. It's now at 1123, a loss of 132 points, or 10.8%. 11% is a bad year for any market and it could get a lot worse over time. The market made its low recently at 1101. It looks like a full retest of this low is coming in time and likely a lot lower before it's all over. There will be some effort by the bulls to rally at 1101 to set a double bottom, but I think any rally off 1101 will go away, and a low on this leg down should be made in the 1050/1075 area, although that remains unclear for now.

The rally to follow won't last, although everyone will tell you it will. It is possible, if things set up right that we can go ever so slightly long, but maybe not at all. I will see. For now the market remains in bad shape both technically and fundamentally. It won't be getting better any time soon. When stocks like Apple Inc. (AAPL) have the MACD leading down price (rare for any stock), then you know things aren't good. Loads of breakdowns everywhere with massive gap downs to protect the bears. The year is bad thus far. It should get worse with rallies along the way. Be more than careful.

Enjoy life and play with a child this weekend if you get the chance.

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