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 Hanging Very Tough

Stock-Markets / Stock Markets 2012 Feb 08, 2012 - 06:54 PM GMT

By: Jack_Steiman

Stock-Markets

You have to hand it to the bulls as they just refuse to give up the gains in this market. For now, anyway. You have to wonder how long they can hold things up this well into very overbought conditions on the daily index charts. The market tried a few times to sell things down, but it refused to cave in. The folks on the side lines that have missed a lot of this move are anxious to get in on any weakness, thus, the bears are having a rough time keeping things down. It'll happen at some point for the bears. It's impossible to time it, because the buy-the-dip mentality is still on.


One day we'll wake up and the futures will be down hard, and they won't come back, and neither will the market once the trading opens that particular day. To play for that moment in time doesn't make much sense. It doesn't mean you go haphazardly about things and buy too much, but not having any participation at all is tough in this environment. You want some exposure, but not 100% exposure. When things become more bullish, markets can stay more overbought. we saw that exact action today as the market tried to get below 70 on the RSI's on those key index daily charts, but it never materialized. The same holds true in bear markets. RSI's can stay at, or below, 30 for many weeks at a time, thus, this action is not something you never see. The momentum is strong, and therefore, we're hanging in at overbought. The market is now having trouble racing higher, but it certainly is in no rush to dive lower, for now. Good solid action for the bulls today as the bull trend is holding on without even a reasonable pullback, for now.

The sentiment issue is not a problem at this moment in time. It will take some time down the road to get this issue to become a real problem. However, that said, you can see the process is under way, with regards to getting more complacent. We're now at 23.4% more bulls to bears, which is a strong 4% rise in the spread over last week. It takes 30% to get me a little antsy, and really, it takes 35% for the number to be a problem for the bulls, so we're not there yet, but the process is unfolding in front of our eyes. Remember, when it was minus nearly 12%, and now we're plus 23%, or a 35%, change. It happens even when you think it can't. That's the game. You go from fear to complacency over time, and not too much time, if things start to go well enough for people. Fear is a tougher emotion, but now that the market is trending upward, it seems as if fear is not in our consciousness, for now. It'll take selling over an extended period of time to get fearful again, because, for now, the market is the buy-the-dips mentality stage. For now, it's no problem, but keep in mind that some, if we're lucky enough, will become a problem someday down the road.

Greece is getting closer and closer to a resolution that the people of that nation won't like, but is clearly necessary. The deal appears to be a good one for them, and the market's liking what it sees, for now. If the deal falls apart, the market will get hit very hard now that it seems things are better there. I don't think the deal will have any trouble wrapping it up the way it needs to, and if it does, the market can take that headache off its docket. That would be a welcome happening for everyone.

It's old, and boring, to say the least, and a real burden to this market. So it'll be a fun day for everyone once this deal gets completed. It may not help the market, immediately, based on how overbought it is, but it's strong news, and positive news, for the longer-term. The market will then have hope that all of the burdens of Europe will start to disappear as well. There's no way to know if that'll actually happen, but the market is starting to smell a happier ending than we thought possible not too long ago. If Europe's ills get taken care of, the market will want to move higher, for sure.

The market is, and has been, overbought on the major index daily charts for a while now. It will have a decent pullback at some point in time, but the higher we can drift, the better the chances will be that the market can hold the major breakout level, which is now 1315. This is where the long-term down trend now lives. It's also where the 20-day exponential moving average lives. This is a powerful double level of support. Big money supported the breakout, so it makes sense to believe that the same big money will want to defend the market, if we start heading back towards 1315 on the S&P 500. If we lose with force, that'll be a major red flag. 1292 would be next, but losing 1315 would be a bearish outcome for the market. 1370 is resistance. For now, we maintain a more bullish bias, but also in the back of our minds we understand a pullback will have to take place to unwind the overbought conditions.

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!

© 2012 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