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Stock-Markets / Stock Markets 2013 Dec 07, 2013 - 10:20 AM GMT

By: Jack_Steiman


The market was keyed in to this report for many reasons, some of them for the wrong reason and some for the right reason. The wrong reason is worrying about tapering. Tapering is good news, and only fools will sell when that becomes a reality. The good reason is clear. More jobs means more people who aren't struggling. That should be ultimately what it's all about. The Jobs Report came in at two-hundred thousand new jobs created versus the consensus of a hundred and eighty thousand expected. Not too hot so folks weren't too unnecessarily worried about tapering. On the other hand, it was strong enough to show the economy is improving. Goldilocks report, and with it the futures rocked, fell, and then blasted up again. It was strong all day, and is set up to possibly break out again, although that's still unclear.

The pullback wiped out in one day for the most part. The bears did sell it some in the first hour, but really couldn't gain much traction once that first hour passed by. The bulls hung in there for the rest of the day. So, yet, another week has gone by with no topping candle on the weekly chart. It doesn't mean it can't be a top, but there is no classic topping candle to this point. The bulls live to tell another week. The bears were unable to do what's necessary, which was to take out the 20-day exponential moving average on a closing basis with some force. The bulls were defending where they had to, and once done, sending the market up once again. The bull trend remains strong and with us until proven otherwise.

Now let's talk about the downside of today's big up day. The bull-bear spread was going to take a little bit of a hit this week, with the market down some every day, the spread, hopefully, heading back towards the upper 30's, which is still a bad number, but better than the current reading of 42.8%. Today likely wiped out any potential bearishness that was creeping in gradually. Now we're likely above 40%, still, if not above, last week's readings. This is not good news for the bulls as at some point that number will have to go in to the 20's. This means the pullback will last longer and be a bit more intense.

It would have been really healthy if today would have been a big down day and got the bulls running. It doesn't take long to upset them. Once the upside stops for a week, or so, they turn and run quickly. Now all has been delayed, so we'll just keep an eye on it and look for when the market tops, which means a decent move below those 20's. One day at a time as sentiment hangs over the heads of all who are bullish. It hasn't kicked in yet, but it will.

For those looking to short, there is only one mostly safe way to do it. The S&P 500 would need to lose its 20-day exponential-moving average currently at 1788. It would then need to lose support at 1775, and head to the 50-day exponential-moving average at 1759. Then a back test of those lost 20's is where you'd want to short if the short-term oscillators confirm price. Yes, lots to look at over time but it'll present itself. Until you get that strong move below the 20's and head to the 50's it's tough to short. The bears so far have been unable to take out those 20's, so it tells you to relax if you want to short for now.

Do what feels right to you, of course, but that's the safest way to go about things. Just focus on 1788 if you're a bear for now. In the meantime, keep things light, but keep some scratch in the game.

Have a nice weekend!



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.

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© 2013

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.

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