Best of the Week
Most Popular
1.Crude Oil Price Trend Forecast 2016 Update - Nadeem_Walayat
2.Will Deutsche Bank Crash The Global Stock Market? - Clif_Droke
3.Gold Price In Excess Of $8000 While US Dollar Collapses - Hubert_Moolman
4.BrExit UK Economic Collapse Evaporates, GDP Forecasts for 2016 and 2017 - Nadeem_Walayat
5.Gold Stocks Massive Price Correction - Zeal_LLC
6.Stock Market Predicts Donald Trump Victory - Austin_Galt
7.Next Financial Crisis Will be Far Worse than 2008/09 - Chris_Vermeulen
8.The Gold To Housing Ratio As A Valuation Indicator - Dan_Amerman
9.GDXJ Gold Stocks - A Diamond in the Rough - Rambus_Chartology
10.Gold Boom! End Game Nears As Central Banks Buying Up Gold Mining Companies! - Jeff_Berwick
Last 7 days
This Commodity Has Perked Up its Investors' Portfolios - 27th Sept 16
Charting the Continuing Gold Market Correction - 27th Sept 16
Stock Market Crash and Recession Indicator Warning: Extreme Danger Ahead - 27th Sept 16
Financial Markets and FX Setups 27th Sept - 27th Sept 16
Crude Oil, Forex and Stock Market Trend Forecasts - 27th Sept 16
Why There is Trump - 27th Sept 16
Save Up to 70% in Shopping Expenses for Daily Items - 27th Sept 16
Gold’s Moving Averages and Long-Term Outlook - 26th Sept 16
September Stock Market - The Not So Silent Demise of Deutsche Bank - 26th Sept 16
SPX sell signal confirmed - 26th Sept 16
SPX is testing the next level of support - 26th Sept 16
Outrageously Entertaining US Presidential Campaign Final Stages - What Happens Next? - 26th Sept 16
BoJ, FOMC and Where To Now? - 26th Sept 16
Stock Market New All Time Highs Next - 26th Sept 16
Why Trump Will Win US General Election 2016 Prediction Forecast - 26th Sept 16
Martial Law Rolls Out Across the US As Jubilee Nears - 26th Sept 16
Stock Market More Correction Likely - 25th Sept 16
US Presidential Election Forecast 2016 - Trump Riding BrExit Wave into the White House - 25th Sept 16
US Economy GDP Growth Estimates in Free-Fall: FRBNY Nowcast 2.26% Q3, 1.22% Q4 - 24th Sept 16
Gold and Gold Stocks Corrective Action Continues Despite Dovish Federal Reserve - 24th Sept 16
Global Bonds: Why Our Analyst Says Things Just Got "Monumental" - 24th Sept 16
Where Did All the Money Go? - 23rd Sept 16
Pension Shortfalls Could Be 4X To 7X Greater Than Reported - 23rd Sept 16
Gold Unleashed by the Fed - 23rd Sept 16
Gold around U.S Presidential Elections - 23rd Sept 16
Here’s Why Eastern Europe Is Doomed - 23rd Sept 16
Nasdaq NDX 100 Big Cap Tech Breakout ? - 23rd Sept 16
The Implications of the Italian Banking Crisis Could Be Disastrous - 22nd Sept 16
TwinLakes Theme Park Summer Super 6 FREE Return Entry for Real? - 21st Sept 16
Has the Silver Bullet Run Out of Fire Power? - 21st Sept 16
Frack Sand: The Unsung Hero Of The OPEC Oil War - 21st Sept 16
What’s Happening With Gold? - 21st Sept 16
Gold vs. Stocks and Commodities, Pre-FOMC - 20th Sept 16
BrExit UK Inflation CPI, RPI Forecast 2016, 2017 - 20th Sept 16
European banks may be more important than the Fed this week - 20th Sept 16
Gold, Silver, Stocks and Bonds Grand Ascension or Great Collapse? - 20th Sept 16
Mass Psychology in Action; Instead of Selling Gilead it is Time to Take a Closer Look - 20th Sept 16
Hillary - Finally Well Deserved Recognition for Deplorables - 20th Sept 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Power of the Wave Principle

Stock Market S&P 1375 Support Breaks

Stock-Markets / Stock Markets 2012 Nov 14, 2012 - 02:56 PM GMT

By: Jack_Steiman

Stock-Markets

Best Financial Markets Analysis ArticleThe bears had their chance yesterday morning with the S&P 500 gapping below 1375. It opened at 1371, only to see the bears give it up to an intraday rally that carried the index back to the low 1380's. The bears had to feel bad mostly because losing key support, such as S&P 500 1375, usually happens on a strong gap down and run. They accomplished the gap down but did not succeed on the run. The bulls found a way to hold the line. Then came last night and Cisco Systems, Inc. (CSCO) fooled the masses with a very nice report and some better than expected guidance. More on that later. The futures exploded higher. The bulls felt they had held the line in the sand and now it would be reversal up time. The futures were strong all night, but they began to weaken some as the morning wore on, although we still had a decent gap up open today. It didn't take long before the upside started to erode. The S&P 500 testing back towards 1375 again.



It churned there for a while, but you could feel the weight of the market as it just couldn't gain any further upside traction. Eventually it snapped, and down we went, closing convincingly below 1375 on the S&P 500. Now all of the key index daily charts are below their 200-day exponential moving averages with the Nasdaq and Dow well below. The S&P 500 tried to desperately hold the line, but it just didn't happen. This action puts the bears fully in control, even though we are now officially oversold on the daily charts, which doesn't happen very often but is a definite sign of market weakness. When it's oversold it can bounce up at any time but, for now, the bears are fully in control, make no mistake about that. It would take something special to change the new normal that has just hit the market.

Speaking of something special, that would probably relate to the fiscal cliff and getting some type of resolution or talk of closing in on one to get the market to reverse course. That was what the market was hoping to get today when the President spoke intraday on what may be happening with regard to compromise by both sides. The market wanted a "feel good" story to reverse the selling. Up until the President spoke the S&P 500 was just barely below that key S&P 500 1375 level. It was when he finished up that the market gave into deeper selling, with the reason being that he gave no indication of any progress being made towards a peaceful and appropriate resolution.

He said the fiscal cliff could come and go with nothing resolved but that he hoped smarter minds would prevail and get something done. He didn't sound overly optimistic, and when that became a fact, the market gave it up in terms of trying to hold above 1375. The bulls gave in as they were rightly disappointed. Outside of that type of potential feel good story, there isn't much out there that can come in and rescue the bulls here. The market broke today and did so convincingly. We'll have to learn more as the days progress, but you can't fight what you saw technically today folks. The bears took S&P 500 1375 away from the bulls. That's the bottom line.

CSCO is definitely worth spending a moment on here. Mr. Chambers, the CEO of CSCO, spoke last night after hours with CNBC host, Maria Bartoromo. He said things were going along alright and that he was hiring, but the hiring was coming outside of the United States. He said it was easier working with other countries, such as Canada, as they don't have the same poor tax laws and that they also made it easier regarding health care issues. A sad reality for what is ailing us all. The best companies in the United States are hiring outside of it. How can that bode well for our economy? How can that help with future growth in our business world? It's not only those in business. It's also those who won't do so because of these headaches. Many won't bother risking new ventures due to the rising cost created by health care and taxes. So yes, the stock did well on their report and was rewarded but, in the end, it was a failing grade for what he said about hiring practices for our own country.

The Dow closed below the three and a half year up-trend line on the weekly chart and didn't fight very hard in giving it up. The market is sending a message here to our Government leaders, and you have to wonder if they even care. The leaders of this country need to get together and prevent us from going over the fiscal cliff. If they do not do so the market will go much lower still. 1375 is now massive resistance on any move back up. That is what we should follow as the Dow and Nasdaq are so far away from that level now. If those three and a half year up-trend lines give way, we can fall extremely hard and fast. Stay cash. We're oversold, but we may simply stay that way for quite some time to come.

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 15-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.


© 2005-2016 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

Catching a Falling Financial Knife