You can never be disappointed too much or surprised all that much when our political leaders drop the ball and allow for things to deteriorate due to their enormous, pathetic egos. It's always about them and not the good of the people they serve. They don't have much to worry about financially or politically, thus, it's business as usual, even when there's a fiscal cliff hanging over our heads. It really doesn't mean all that much to them. Their safe, wrapped up in their little shell of protection. When it comes to the big decisions, ones where they have to put power and ego aside, they fail. It's really that simple. They just fail. It's been in going for what seems like our entire lives but we've learned to accept it as politics as usual. There comes a time, every now and then, however, when they have to come through big for the people they serve, and that's when their lack of soul shines through. This time, sadly, is no different.
They dropped the ball big time, and thus, the futures eroded all night with the lows at around -250 on the Dow. They improved a bit as the night went along but nothing spectacular. We opened lower and eventually went to approximately -200 before rebounding. Not a great day, but when you think about it, nothing to be upset about. The market could have been much worse, but it wasn't in the end. It doesn't mean all is well here but it does show the inner strength of this market. If we were down four or five hundred today, no one should have been surprised. I'm more surprised at how decently we held up, considering the consequences of going over the fiscal cliff, the market still feeling some hope is out there. Never argue with the market. We held where we had to for now, but we shall see what's in store for the rest of this month as the leaders, or so they call themselves, try once again to get something done. The clock is ticking.
There's something very interesting going on for quite some time that is worth noting. Foreign markets across the world are in really good, bullish shape. It's everywhere you turn for the most part. Asia to Europe, and everywhere in between, has seen their stock market rocking higher over the past few months. The laggard is our market, and that sure is a change of trend. Even though our affairs will affect the rest of the financial world, the foreign markets have been ignoring our situation and advancing on their own as better economic news keeps coming in.
Markets generally move on earnings and economic reports, so it's easy to understand why these countries have seen their market advance quite nicely lately. If we go over the cliff there's going to be some fallout, for sure, but the foreign markets don't seem intimidated by what's taking place right here at home. Maybe they see a way to keep growing even without our help. We're out sourcing so much that maybe that's a big part of it. If we go over the cliff, that'll only increase. The key point here is that if we can solve this massive headache, there's plenty of catching up to do. It wouldn't take much of the right news to get us rocking.
So what levels break for the bigger picture stock market to turn bearish. The answer is seen on those long term, three and a half years, up-trend lines off the March 2009 lows. The Dow has that level at approximately 12,700. The Nasdaq is at 2,900, and the S&P 500 is at 1,350. We can lose 3030 down to 3000, and although that would not be good news for the bulls, it takes a loss of 2,900 to get the bears to be back in full control of the price action. It wouldn't feel good to lose 3030 with force, and possibly even 3000, but you have to remember that a multi-year up trend line is truly the line that separates bull from bear. If we went down to 2,900 and held, it would feel awful, but it still is not bad action for the bulls.
Bottom line is bottom line, so let's just see how the next few days go with our political leaders. A day, if not a moment, at a time.
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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