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

Stock Market Consolidating...

Stock-Markets / Stock Markets 2012 Mar 22, 2012 - 01:29 AM GMT

By: Jack_Steiman

Stock-Markets

There's nothing wrong with the market consolidating. The consolidating would be even more beneficial if it did this for another month. However, it's unlikely that it will. As we've seen, this market has been tough to sell short-term. There are very "itchy" buyers, once the market does any type of small pullback. People want to get into the market that has been in before, and people want in the market that has missed it altogether. Some people just have a real inclination to be in the market as interest rates are simply too low for anyone to do anything else with their dollars. Why fight the tape is what they're thinking. While it seems unlikely from a fundamental point of view, the market understands something we don't for the time being. The energy of the stock market is a lot smarter than our collective intelligence. Let the market do the talking.


Your job is to do all the listening. Don't let the emotion of what you think should be, get in the way of those pretty base set-ups, and other nice patterns in place, or getting close to being in place with just a little more selling. The market has sent its message, and the theme hasn't changed. The Fed Bernanke said let it rise and it's rising. The Fed said I need a higher market, and I will do whatever it takes to get a higher market over time. Fed Bernanke knows he's at the controls, and he understands the power of his words. He'll make sure the market is full-speed ahead for as long as he needs it to do so to try and heal an ailing global economy.

Fed Bernanke, and some of his brothers-in-crime, decided to change the status of interest rates just one week after promising lower interest rates through 2014. The talk is now about a small increase starting somewhere around the end of 2012. Nothing from nothing really, but this was Fed Bernanke's way of trying to cool off commodity prices, which are running higher in a way that clearly does not make him happy. To say inflation is not bad, because a car is not rising in price too fast, or that washing machines are not too bad, is nonsense. The things we use every day, such as energy, and food, are out of control. He's doing what he can to get those prices down a bit. So he talked up the need to possibly begin raising interest rates very slowly two years faster than he promised exactly one week ago.

It's really just an excuse for the market to try to sell a bit, but he knows the market will handle this news, and that only the commodity sector will take a small hit. He's more than fine with that. The majority of the market sectors are yawning this news off as they should. It will take some time to correct the damage done to those commodity stocks, however. The Fed is simply trying to control the one major bug in the system, known as inflation. You pump in the money day after day, and that's the results you get. Massive inflation. So now the Fed is trying to knock it down a bit.

The market spent much of the day in the red, except for the Nasdaq 100, which is out performing, but still very overbought on its daily chart. It could really use a break. The short-term 60-minute charts have sufficiently unwound from overbought, but the Nasdaq 100 daily chart could use an extended break. Not sure how much we get, but a few weeks off for good behavior would be a positive for this market. It would reset things, and allow for more energy needed to break out further in time. The Dow and S&P 500 are not overbought on their daily charts, but the S&P 500 is close. The mid- and small-cap stocks are also not overbought, but again, a break lower would help the whole market unwind things for better set-ups over time. Patience is needed as the process is under way.

Massive support comes in at Dow 13,000 and S&P 500 1370. A back test, especially of the S&P 500 at 1370, would be great news for everyone concerned. A slow move towards that level would also serve up to bring in some nice pessimism. Not that there's a problem, because there isn't, but the more pessimism I hear, the happier I am in knowing that things will once again move higher. 1410 up to 1440 is strong resistance on the S&P 500, and again, 1370 is critical and powerful support. Be patient here is my best advice to all of you.

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