Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
STOCK MARKET DISCOUNTING EVENTS BIG PICTURE - 31st Jan 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Fed....Overbought....Froth.......Still Heading Higher....

Stock-Markets / Stock Markets 2013 Dec 21, 2013 - 11:29 AM GMT

By: Jack_Steiman

Stock-Markets

An interesting week to be sure. Wednesday when he tapered just enough to start the ball rolling, but not so much that folks are fearful of the entire liquidity pool being drained out too fast. He also let the world know that zero rates are with us for years to come. That was really the magic that sent the market flying higher throughout the afternoon on Wednesday after his announcement. After a pause Thursday, his magical wand got those buyers back in the game on Friday with the S&P 500 making a nice breakout over 1813.


Not much to add except that the bulls have made all the right moves to get this market on breakout just about everywhere. The bears have to feel like they have no chance here since no matter what is going on from overbought to a ridiculous bull-bear spread they just can't get any momentum to the down side, especially when they know they have to remove those key 50-day exponential moving averages. They came oh so close, but they did not get the job completed. They've failed for now, and that's what they carry with them in to this weekend. You can understand their disappointment as everything was aligned for them, but it just didn't work out for them. Yet! A solid week for the bulls.

I mean, come on, they're so ridiculously overbought on so many time frames it pains to have anything going on in this market to the long side. Historically the market should be getting annihilated. You have to have a strong will to be long in this market, but if you're not in you feel you're going to miss too much. The overbought levels on many stocks and indexes are at extremes rarely seen. Sixty-minute short-term charts are constantly seeing readings well in to the 70's, and sometimes the 80's, for brief periods of time. Many daily charts for individual stocks are over 80 and showing no inclination to settle down, although they'll have to at some point soon.

The real point being things are more than unusual technically here. Traditional oscillator readings are just not working. Can you say froth? You bet you can. All sectors are joining in the ridiculously overbought party from time to time unless you're dealing with SPDR Gold Shares (GLD) and ProShares UltraShort Silver (ZSL), etc. Where the madness stops no one knows, but just knows things are absurdly overbought in many cases. The Nasdaq monthly at 80 RSI. Monthly! That's simply unheard of. It also means that at any time things can crash down hard in an instant, but you stay with the trend until proven otherwise meaning bigger picture the removal of the daily 50-day exponential moving averages. For now, those oscillators are defying technical logic. Won't last forever.

Speaking of the bull-bear spread, the readings coming in to this week were 43.9%. It stayed the same as the prior week, even though the market was down four of the five days in that week. With the big move up this week, along with breakouts across the board, it is quite likely we're over 44.1%, which was the highest reading for the past twenty-five years. The number could be 45-46% or even higher. Are there any bears left at all? Makes you wonder. With this knowledge at hand just recognize a quick 5% or quite a bit more can come off the top. The selling can start out of nowhere without any notice whatsoever.

It's scary and thus you should not get too complacent and let your guard down. You'll likely regret it if you do. For now, we stay long some exposure, but know that there is extreme risk still out there.

Have a great weekend!

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!

© 2013 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.


© 2005-2022 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