Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Investing in the METAVERSE Stocks Universe - 8th Dec 21
Stock Market Sentiment Speaks: I Expect 15-20% Returns For 2022 - 8th Dec 21
US Dollar Still Has the Green Light - 8th Dec 21
Stock Market Topping Process Roadmap - 8th Dec 21
The Lithium Breakthrough That Could Transform The Mining Industry - 8th Dec 21
VR and Gaming Becomes the Metaverse - 7th Dec 21
How to Read Your Smart Meter - Economy 7, Day and Night Rate Readings SMETS2 EDF - 7th Dec 21
For Profit or for Loss: 4 Tips for Selling ASX Shares - 7th Dec 21
INTEL Bargain Teck Stocks Trading at 15.5% Discount Sale - 7th Dec 21
US Bonds Yield Curve is not currently an inflationist’s friend - 7th Dec 21
Omicron COVID Variant-Possible Strong Stock Market INDU & TRAN Rally - 7th Dec 21
The New Tech That Could Take Tesla To $2 Trillion - 7th Dec 21
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Employment Light... Stock Market Corrective Move Continues.....

Stock-Markets / Stock Markets 2012 Apr 10, 2012 - 03:31 AM GMT

By: Jack_Steiman

Stock-Markets

Markets, when they need to sell, look for a reason to start the sell-off. The market will often simply make up some type of excuse to get moving lower. Although, there are times when the market actually has the right news come out. That news occurred on Friday of last week. The Jobs Report came out much, much lighter than expectations, and the selling started. The futures ripped lower after the report, and held lower all weekend, allowing for a large gap down as the market opened for trading today. The market pretty much traded sideways the rest of the day as things got oversold on the short-term 60-minute charts. Once that unwound back up a bit intra-personal day, the selling started back up again very late in the session. The indexes were down roughly one percent for the day. A poor advance-decline line solidified the selling for the bears. The market has begun the process of forming a deeper-base move off the recent 1422 top on the S&P 500. Unfortunately, for the very impatient, this is going to be a longer-term situation. It's not going to be cured in just a few weeks. We are in week two, and likely will be in week 10, and more further down the road.


There may be lots of up days and lots of down days as the market still works on first finding a bottom to work off. My guess is that will be near SPX 1340, in time, but it could be a little lower than that. It won't be straight down to 1340 either. A likely bounce off the 1369/1370 area could be expected. So be prepared for what's in store for the short- and medium-term. We simply got too overbought for too long, and now it's time to pay back a bit with a flat-to-down market for several weeks, to likely months. It is necessary and healthy. Don't be despondent over it. Welcome it as it takes the excessive optimism at hand and turns it into pessimism. I'm sure the one week of this has already worked on some of you from a negative perspective. Just recognize what's at play and you'll have an easier time coping with the market's somewhat inability to have sustained upside action.

Sentiment is definitely worth taking a few minutes to discuss. Think about how rapidly the bull-bear spread went up over the past two weeks. It went from a more neutral, to slightly bearish 17%, to now over 31%. Any time you're over 30% and approaching the magic number of 35%, and you have overbought weekly charts on the NDX and PowerShares QQQ Trust, Series 1 (QQQ), the market is close at hand to some form of selling, and thus, it should come as no shock to anyone that we're in the pause phase of this bull market. It never takes a long time to sour folks on things. Fear is a far greater emotion than greed. It's easy to be in the greed phase of a market. No emotional work required.

However, it does take a lot of work when you're in fear. You act in fear. You get negative real easily when things aren't great. It's understandable. When markets stop going higher all the time, folks think the upside is over forever as they've lived through too many bear markets to think otherwise. The fear of getting slaughtered, yet again, is too overwhelming emotionally, and thus, they react in a way that unwinds the sentiment rather quickly. If the market does what I expect it to over the next several weeks and months, I would think the bull-bear spread will rapidly be heading towards the teens again, or possibly even lower. It picks up momentum with every passing week, so it shouldn't take too long to get the problem of too much optimism under control. Patience a real virtue here.

Fed Bernanke is worth speaking about here. He has what I would consider the worst job on the planet. I think he has to see what's going on globally, and say to himself, "Ollie, how do I get out of this one." That's for all of you old enough to remember Laurel and Hardy. He recognizes that Europe is in some very deep trouble. They are facing financial disaster throughout the Eurozone. He knows this, eventually, has to spill over to our economy as imports and exports will be severely affected negatively. That will bring us closer to recessionary levels as time moves along. He also knows that if our stock market goes back to a bear, the economy will take a severe hit, and recession will be inevitable. However, if he pumps in too many dollars to keep the markets happy, he faces hyper-inflation. That will kill the economy as well.

The box is where he lives as he's stuck in a huge one. I don't envy his problems. There's no real solution, because there simply isn't one, and he's not likely to find one either. He hints as different things at different times, depending on what's the biggest headache of the moment. Hyper-inflation is his problem du jour. He's trying to knock down the commodity stocks in a way that won't destroy the stock market. Not an easy dance. I hope he took lessons. So he moves along day to day watching the slowdown in China, and even worse, in Europe, and prays someone somewhere figures out a real solution to what ails the global economies. At some point in time, it seems inevitable that the whole ship goes bye-bye. He will have no way to help our country any further when the European problems, along with those in Asia, intensify out of control. He'll simply have to let our country take the hit. It's coming in time, but I don't believe we're there yet. Still some time to go before we meet the truth in time.

We closed at S&P 500 1382. We are only one percent away from the confluence of support at 1369/1370, which is the 50-day exponential moving average and the breakout level from weeks back. It won't be easy taking out this level of support, but in time, I think, the 1340 area will be tested. 1424 is massive resistance, and my guess is, we won't be seeing this level again anytime soon. It won't be a straight move down, but upside won't be easy. There will be lots of moves in both directions. Trend lower for now. See this as an opportunity before we get the big bear move in time. That's still a ways away. Go very slow and easy for the time being. Use positive divergence set-ups on the 60-minute charts to enter new plays long, and if you like, use back tests over time to short a bit. But remember that the trend is still higher overall. It won't be short-term, but bigger picture, that's the reality of things.

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.


© 2005-2019 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