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
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 Negative Divergences Unwound...

Stock-Markets / Stock Markets 2012 May 03, 2012 - 04:50 AM GMT

By: Jack_Steiman


As the day moved along yesterday, I noticed the short-term 60-minutes charts got both a bit overbought, and they also printed negative divergences. From that point, yesterday until early this morning, the Nasdaq fell sixty points, two percent to work off that combination of overbought and poor divergences. That's about what it usually takes, give or take one percent. Remember, these bad divergences, and overbought conditions, occurred on the 60-minute time-frame charts, and not on the daily charts. That's key as those 60-minute charts can unwind those conditions within one to two days, while, if they took place on the daily chart, it could take several weeks, and sometimes even months. Never panic out of long positions just because those negatives set-up on a 60-minute time frame on all the index charts.

Definitely, get out of all longs, if the daily charts flash those nasty divergences. But we're not close to that now, so the unwinding that took place fits perfectly within the scope of what this market has been doing for basically two months now. Sitting, and riding back and forth, in an ever-evolving base/handle, 1422 the top of the base for now, and 1357 the bottom of the base for now. The bulls came in today, and didn't allow things to fall too far. They actually got the Nasdaq to turn green at days end. The whipsaw continuing as expected, with this possibly lasting many more months. I'll speak about that in detail below. It was good day for the bulls overall as they held the fort after more economic news came in poorly.

The whipsaw should last months, but I think we've not seen either the top of the base/handle, nor the bottom of this base/handle. Also, over the next few months, the range will expand out both ways. We'll break over 1422, before this run is done, and a move below the double bottom at 1357, will take place as well. They can take place many months apart, and if they do, you'll probably end up with a six-month total base that will drive most traders nuts.

The head fakes will be too numerous to count on both the up and down side. Again, many days, or even weeks, it will seem like the bull market is ready to rage on again. Many weeks will feel as if we're starting a new bear market, especially if we fall below 1357. It'll feel really ugly to everyone, with sentiment eroding very rapidly. It could easily turn out to be a base/handle from 1440/1450 down to 1325/1340, quite the base to lose your minds. It'll be interesting as it unfolds, but for now, I think the short-term is still in the favor of the bulls, with a possible move over 1422, but not by very much, if it does happen to take place.

The market is in a mostly ignoring bad news mode again, but there is a second major report this week coming on Friday, although we'll get the important jobless claims number tomorrow, before the market opens for trading. The jobs creation number is out pre-market on Friday, and this one is almost as important as the ISM Manufacturing Report that we heard about on Tuesday. The report on Tuesday had very good numbers behind it, which was a big surprise to the upside.

The market blasted up initially on the news about the report. However, the majority of reports have been coming in rather weakly these days, so this jobs report will receive a lot of well-deserved attention. If the report is acceptable to the market, we have a decent chance of getting above 1422. It would be interesting to see how adversely the market would react, if the number is a big disappointment. The market is not, at least for now, selling on bad news, but it would require some big time work by the bulls to hold this market, if the jobs number is a real dud.

It's interesting times as always, folks.



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