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
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
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 Large Tech Red Flag.......

Stock-Markets / Stock Markets 2012 Sep 11, 2012 - 02:27 AM GMT

By: Jack_Steiman


You wait for a moment that tells you it's likely you're nearing a short-term top, and today, we possibly saw that top as the market went after stocks it hasn't touched in months, and it nailed them in a very big way. Apple Inc. (AAPL), the leader of all leaders, was crushed to the tune of $18, while others were nailed with long tails off the top. Stocks, such as Google Inc. (GOOG) and (PCLN) just to name a few. We know we have a negative divergence on the S&P 500 daily chart, so you know it's coming at some point. Not only were some of the best froth stocks hit, but other stocks you don't see get hit very often took it on the chin a bit today.

Stocks, such as The Boeing Company (BA) and 3M Co. (MMM) are two powerful Dow stocks. The Dow has joined its brother, the S&P 500, in flashing a negative divergence, so we have to be very careful here. When those negative divergences kick in, you often see leaders hit hard, such as I mentioned above. None of this means the stock market is about to get destroyed. I don't think it will. There will be plenty of up days, but I do think it will be very difficult for the bulls to get any sustained upside action for a while. Not forever folks, a while. Because the overall trend is higher, shorting won't be easy, but there may be a time, or two when some shorting can be done. Probably the most important message you can take from today is that it won't be easy for a while for the bulls, so you want to move very slowly with regards to new plays. Nothing aggressive right now is the way. Loads of cash is your best friend.

It's healthier for a market to sell off, or at least struggle for significant upside, if it gets too overbought. The charts tonight will show the overbought daily charts and how those 70 RSI's can be the place where rallies go to die for a while. Again, that's healthy longer-term as it resets things and more importantly, a struggling market allows for some real pessimism to come back in as traders get frustrated with a market that can't sustain gains for any length of time. When markets sell or struggle, pessimism creeps in quite quickly. It would be great to see those RSI's on the daily charts get into the lower 50's, or better yet, into the 40's, or possible at, or near, oversold as they approach 30.

Some leaders, such as those mentioned earlier in this report, are really up there with very elevated oscillators across the board. They can't, and won't, stay there forever. A few weeks off to reset way down would be just perfect for more aggressiveness with buying new long positions. We are at a point where we're simply a bit too happy with things and the markets job is to make the masses unhappy. I think that process may be under way, but remember, folks are programmed to buy weakness, so it won't be an easy move lower. Probably a choppy stair- stepping move lower, but you have to be open so some deeper selling if it should hit.

Two major events are upon us this week. One is the announcement of a new product from Apple, with the other being the usual meeting from Mr. Bernanke. The market will be tuned into Apple to see if it likes the announcement, but it may want to sell it no matter what they say. It'll be very interesting to see how the market responds to it. It will be far more interesting to see how the market responds to Fed Bernanke. I still don't believe he will give QE3 quite yet. I think that only comes if the market starts to sell hard and begins to lose key support levels across the board. We'll watch closely as to how the market deals with the news from these two events to give us more insight, but either way, I think for now, all of you need to play far more defensively.



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 15-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