Best of the Week
Most Popular
1.Ukraine Preface, the Emerging Dynamics Of Petro-Yuan Standard - Jim_Willie_CB
2. Speculations Reversed - Gold Price Stealth Rally 2014 - Peter_Schiff
3.Bubbleberg News Drivel Masquerading as Financial Reporting - David A. Stockman
4.Nationwide UK House Prices 9.5% Inflation, Housing Market on Steroids, Help to Buy Anniversary - Nadeem_Walayat
5.How to Profit from Palladium Huge Price Surge… - Peter Krauth
6.UK Home Solar Panel Installations Good or Bad for House Buying and Selling? - Nadeem_Walayat
7.Global Gold Manipulation Update - MAP Wave Analysis - Marc_Horn
8.Ukraine Capital Controls and 200% Inflation But Still In Better Shape Than US! - Jeff_Berwick
9.The Rise of a Euro-Chino-Russian Superpower - Stephan Bogner
10.Across Europe Secession Movements Intensify - BATR
Last 72 Hrs
Silver, Gold, and What Could Go Wrong - 15th Apr 14
How I Intend to Survive the Meltdown of America - 15th Apr 14
France Wakes Up To The Multicultural Multi-Threat - 15th Apr 14
The Real Purpose Of QE - It’s Not Employment - 15th Apr 14
Peak Coal - 15th Apr 14
Flash Crash, Rigged Markets - What’s the Frequency Zenith? - 15th Apr 14
Forecasting U.S. GDP Growth: A Look at WSJ Economists’ Collective Crystal Ball - 15th Apr 14
Stock Market - Is Something Nasty About to Happen? - 15th Apr 14
How to Trade Your Way To Freedom - 15th Apr 14
Understanding (and Ignoring) the Media Bandwagon Against Gold - 15th Apr 14
When Stock Market Bubble Crashes, Take Refuge in Gold Stocks - 15th Apr 14
Bitcoin Price Strong Appreciation to Be Followed by Declines? - 14th Apr 14
Greece, Turkey, We're Shuffling The Cards on Our Europe Investing Play - 14th Apr 14
Silver Price Ultimate Rally: When Paper Assets Collapse - 14th Apr 14
Get Your Share of an Extra Trillion Euros Money Printing - 14th Apr 14
Fourth Reversals in The Gold and Silver Charts - 14th Apr 14
Stock Market Nearing Rally in a Downtrend - 14th Apr 14
London House Prices Bubble, Debt Slavery, Crimea 2.0 - Russia Ukraine Annexation - 14th Apr 14
Four Horsemen - Top Economists Explain the Source of Our Economic Crisis - Video - 13th Apr 14
Peak Oil And Global Warming – A Question Of Culture - 13th Apr 14
The Global Banking Game Is Rigged, and the FDIC Is Suing - 13th Apr 14
College Degree Earnings Propaganda - 13th Apr 14 - Andrew Syrios
Stock Market Potential Diagonal Triangle Pattern Forming - 12th Apr 14
Ukraine Crisis – Military Flash Drive Thinking - 12th Apr 14
Gold And Silver – 2014 Coud Be A Yawner; Be Prepared For A Surprise - 12th Apr 14
Gold Preparing to Launch as U.S. Dollar Drops to Key Support - 12th Apr 14
Manipulated Stocks Markets And The Empty Bag - 12th Apr 14
Stock Market - It’s Not Time to Panic… It’s Time to Buy - 12th Apr 14
Doctor Doom on the Fiat Money Empire Coming Financial Crisis - 12th Apr 14
Sheffield, Rotherham Roma Benefits Plague, Ch5 Documentary Gypsies on Benefits & Proud - 11th Apr 14
This Bitcoin Price Rally Might Be a Fake One - 11th Apr 14
GDX Gold Stocks Benchmark - 11th Apr 14
Silver Price Finally Outperforms – How Bullish Is That? - 11th Apr 14
Limits to Employment Participation, and Societal Change - 11th Apr 14
US Moves To Restrict Travelers Taking International Flights - 11th Apr 14
Bill Gross to El-Erian: 'Come on, Mohamed, Tell Us Why' You Resigned PIMCO - 11th Apr 14
British Pound GBP/USD - Double Top or Further Rally? - 11th Apr 14
Don't Miss the Boat on Big Biotech Catalysts: Keith Markey - 11th Apr 14
Russia Invaded Crimea and These US Energy Companies Made a Killing - 11th Apr 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Some Selling Off The Stock Market Top...More To Come?.....

Stock-Markets / Stock Markets 2013 Feb 24, 2013 - 12:44 PM GMT

By: Sy_Harding

Stock-Markets

That's the big question. Was the two-day selloff all the bears will be able to get, or will it be the beginning of deeper selling to come as the index charts unwind further off the 70-RSI tests on both the daily and weekly charts. We will have our answers soon enough. Early next week should be telling about whether we gap over gap resistance or whether the gaps just above act as a wall, thus, starting the market down on the next leg of selling. From a purely technical perspective, it would make more sense to start the next leg down as the gap down was on heavy volume, and today's buying was on much lighter volume. Gaps are very tough to take back, especially on the first try, and with both the daily and weekly charts having reached overbought, it should be tougher to make a strong move back higher.


Anything goes once you're in a bull market, which we are, so it shouldn't come as a total surprise if we make one more move higher and create a deeper negative divergence to take us down. It's possible we can test 1530 again without falling first, but if we do, the oscillators will be quite negative. It would be best if we sold harder once again and allowed things to unwind, but we can't control the markets. This week saw the first snap down we've seen in quite some time, the Nasdaq falling 95 points from its high on Tuesday to its lows on Thursday. We retraced some of that move today, of course. It will be a big week next week as we see what the bears can do, or not. They shouldn't allow the Nasdaq to close above 3163, if they're serious about making some noise for the short-term.

Bull markets become repetitive for traders. They chase up any time there's even a hint of selling as they're always looking for an entry into plays they like to follow. High beta names for the most part. This is why even pullbacks can be difficult to sustain, at least at the very beginning of them. The trained behavior comes in and gobbles up what they've seen work over and over. At some point, it burns them, but until it stops working, they chase. If you want down side action, and you're a bull, you need patience. I feel strongly that, for now, the bull market is on, regardless of how strong the pullback becomes. The Fed has made it clear that they will not pull the plug on low interest rates.

More importantly, they have no intentions of pulling the liquidity plug either. The bulls know this, and so do the bears, and that's why sustainable downside action is very difficult bigger picture for the bears right now. They need a Fed who will allow the market to fall hard. But right now it's just not in the cards. So with everyone on board with their actions, the wash, rinse and repeat cycle is ongoing, pullback or not.

The one ongoing bear market continues to be commodity land, especially in the world of coal, gold and silver. There are others, but those are the key ones we all watch. Even with many of these metals extremely oversold on their daily charts, they are having a hard time getting any sustainable rally. They should rally a bit from here, but be aware of the type of market they're in and adjust accordingly. Many have stated the worst was over a year ago, but it just keeps stair-stepping their way lower. No sign of that changing. The fear bubble is bursting.

Chasing weakness is often a good thing but it's not good when you are chasing the falling knife. A bear market is just that, and thus, know when to step aside. Focus your energy where things are working. Good longer-term mature bases or stocks pulling back to support with the 20-day EMA higher than the 50-day EMA. Look for healthy stocks over weak ones and you'll likely have a better experience.

Deeper, longer-term support on the S&P 500 is at 1470 to 1480. That, I believe, may still be tested before we try much higher again, although today was quite strong, stronger than usual on a reflex bounce. That said, it could get tested, but if it does, it would provide a strong buying opportunity. S&P 500 1530 is resistance, and if that clears, it can see the 1550 level before trying lower again. We will get more insight on that very soon. Don't be shocked if we sell next week, but be open to both sides of the coin. If the Nasdaq clears 3163 on a closing basis, the buying is on again and the bigger pullback will have to wait.

Next week will be an interesting week.

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2013 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Sy Harding Archive

© 2005-2014 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

Free Report - Financial Markets 2014