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Catching a Falling Financial Knife

Good Jobs...Bad Jobs.... Stock Market Still Lateral.....

Stock-Markets / Stock Markets 2012 Dec 08, 2012 - 07:21 AM GMT

By: Jack_Steiman

Stock-Markets

The Government came out with their bag of tricks this morning pre-market, telling us that jobs increased by 146,000, which was much better than expected. What they failed to tell you was that the jobs market lost 122,000 people when their claims ran out with the Government--the new math, apparently. So in the end the report was actually worse than expected, but they want you to believe that things are actually improving.


I guess they think we're all dopes. It's the same way they choose to look at inflation. They count everything except food and energy. Seriously? Outside of health care costs going through the roof, what else is there really, other than the inflation caused by our most used daily products of food and energy. We seem to accept all this garbage, but in the end, the number today was not nearly as good as that which was reported, and for once the market didn't buy it at all.

The market rose early on with those futures blasting up initially. The S&P 500 was up over a ten handle. Nice action. It opened with a four handle and ultimately went red as the day wore on. It went back and forth from red to green, but in the end, the report wasn't accepted as many thought it might be. Fool me once...! The market simply went back to its usual behavior we've been seeing for far too long now. Whipsaw is the name of the game, which is what I've been warning you about for some time now. There's nothing out there to change this behavior as we tinker on the edge of recession, until we get a resolution from the fiscal cliff. It's really that simple. Today was the same old. You start one way and end another with many head fakes in between. The new normal for now.

Playing this type of market is what has everyone so baffled and unhappy. There really isn't a strong strategy to be honest. The market is whipped about due to the uncertainty it's facing, and due to the words spoken from both political sides on an almost daily basis. It's almost impossible to play this way. Unless you choose to wait for oversold to very oversold conditions, or on the other hand, overbought to very overbought conditions, there really isn't much there.

The problem is waiting and getting those oversold and overbought conditions to take place. They don't that frequently on the daily charts. Far more often on the short-term sixty-minute charts, but unless you're a day trader, it's imperative you wait for the daily set-ups. It ultimately means you're likely doing a lot less trading than you'd like. It's frustrating and disappointing. I get it but, if you don't obey the rules laid out in front of you here, you're likely to have a lot of bad experiences. Less is sadly more for now with there being no sign of that changing the rest of this month as the two political sides play hard ball with each other, and thus, with all of us. Adjust accordingly.

Apple Inc. (AAPL) is in a longer-term down trend that's been completely confirmed technically when it failed on its back test of the 50-day exponential moving average with a black candle. It has been down hard ever since. It has set up shop with clear support and resistance levels. 555.00 is now the first area of tough resistance followed by the wall at 569.00, or the recent gap down. Support is at 518.00 followed by 505.00. Below 505.00 is 460.00. AAPL is the leader and needs the right type of news to break this continuing down trend it has been in for a long time now. If AAPL can find a bottom then the market is likely to find it as well. Remember that AAPL is very heavily weighted and if it's struggling so will the necessary market leader, the Nasdaq markets are healthiest when froth or the Nasdaq leads.

Look folks, in the end it's about the resolution or lack of one regarding the fiscal cliff. The market is anxious, and that's why you get the whipsaw. The reason it doesn't tank to this point is because there's really nowhere else to put your dollars. Interest rates are too low. With this in mind, the market players are looking for safety in lower beta, lower P/E stocks found in the Dow and S&P 500. Always exceptions to that rule, but the overall behavior of the indexes shows this to be the case. The Nasdaq is not that desirable to the masses for now. It will become desirable once again when the fiscal cliff has been resolved. This tells you that cash is basically best with only very tiny exposure from time to time. Nothing wrong with being completely cash if need be.

Be peaceful and wait for resolution. The market should become more directional at that time.

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.

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Catching a Falling Financial Knife