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
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

Stock Market Bulls and Bears do Battle at S&P 1325

Stock-Markets / Stock Markets 2012 Feb 02, 2012 - 01:49 AM GMT

By: Jack_Steiman


The bulls are trying, but so are the bears. The bulls are doing their very best to move the market through S&P 500 1325. The bears are drawing the line in the sand with one intense fight. They are telling the bulls that, although things are moving upward, getting through 1325 will require a lot of work. There have been two attempts now to get through 1325, but both times we've had churn, not a run through, and beyond. That's the bears doing everything humanly possible to hold things down.

They know that a move cleanly through 1325 will cause somewhat of a melt up in the averages, and that means bad news for them as they'll be forced to add fuel to the run higher by buying back their short positions. There are still quite a few bears in this market as evidenced by the bull-bear spread to be talked about later in this note. The bears are trying to pool their collective efforts to keep it from getting out of hand for them. If a key down-trend line is captured, the bulls will get braver as well. That's why the bears are working so hard to keep things down below 1325.

Today we had the gap up based on overseas economic news. We got to 1330 only to see it fade as the day wore on. We closed just below 1325. 1333, the previous high, so today fell a drop short of that. Good effort by the bulls today, but once again the bears did save themselves from the worst case scenario, with a late day push lower, although it wasn't very forceful to say the least. The bulls are on the precipice of something special, but please keep in mind that, until they forcefully break through 1325, you shouldn't get overly bullish or excited. It's fun to think about it, and it's easy to say it's in the bag, but it's not. Until it is, so keep that in mind before getting inappropriately aggressive.

The bull-bear spread came out today, and showed a bit more bearishness from those bears, and a little less bullish fever from those bulls. Each side going the other way by roughly one percent, which allowed the spread to go from 21% more bulls to bears two weeks back to 19% at the close of last week. That's perfectly neutral, and to be honest, it's surprising that the spread hasn't gotten higher to this point. Some of that can be equated to the fact that there are less people playing these days, and the fact that folks are still quite jaded from the bear markets of the recent past. Once the spread gets to 305, that's a red flag, although it's still not too many bulls. Just a heads up, so we're far enough away from that to say sentiment is not a problem in the here and now. I don't know what it would take to get the spread up to 30%, and then to the real red flag at 35%, but we are far enough away at this point in time to be able to say it's no problem. The market will deal with real fundamental problems that could derail things, but sentiment is not a problem for now. Good to see that fear is still out there to some degree. The bulls always need that in their arsenal.

Cycling around. That's what the market is doing in order to protect itself from falling too hard. The bears are always looking for places to knock stocks down. Normal behavior, but the job is getting tougher as the market is finding a way to hang up there, but simply moving from sector to sector. As one gets overbought, they allow it to cycle lower in order to reset the oscillators. Once it's no longer overbought the bulls rush back in and keep it trending higher. It really doesn't matter where you look. The results are pretty much the same. Most sectors are in bullish patterns, whether it's a more defensive area of the market, or a more froth-type area. It's very interesting to see sector after sector hold with its daily RSI at 50, or higher. It's hard to get any sector to move far below 50 on its RSI. That's a sign of real health. The longer this process continues on, the more frustrated the bears are likely to get. It's the game of emotion playing its role. When a given side gets too frustrated, that's when you get a strong breakout move or breakdown move if things are on the bearish side of the coin. The health of the overall market can be seen in the health of the majority of the sectors from all different areas of the stock market world.

The market is overbought on many of the index charts, and almost overbought on the few that are not, such as the Dow and S&P 500. Markets can stay overbought if they want to, especially at breakout junctures. It's not impossible, therefore, for this market to go higher for a while longer before a more sustainable selling episode kicks in. However, be aware of the reality that at any time we could pull back a lot more than you'd like to think possible. If we dropped to S&P 500 1267, or 5% lower from here, that would still be bullish in nature. Let's see if we can break out and stay overbought, but be prepared for a pullback from overbought, so you may not want to get overly aggressive for the moment. Some exposure is definitely appropriate. It's really all about who wins the 1267/1325 showdown. Looks good for the bulls but you never know so be careful.



Jack Steiman is author of ( ). Former columnist for, 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!

© 2012

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 - 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