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
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 Sentiment Playing Out perfectly.......

Stock-Markets / Stock Markets 2014 Feb 06, 2014 - 06:06 AM GMT

By: Jack_Steiman

Stock-Markets

Just a few weeks ago we were at 46% on the bull-bear spread. We had spent numerous weeks trading with a number above 40%, which is extremely rare and unusual. You know it can't last, but you never know when it's going to snap. We finally snapped, and look where we are now. 28.5%. How sweet is that! The market is doing its dirty deed to get folks extremely pessimistic. It had to come, and now it's here. We're happy about that to be sure. Now we need to get it lower. Teens would be a thing of beauty. I think it'll happen, and it won't take too much longer. Another 2-4 weeks of poor action, and we'll be looking at a spread below 20%. That would be music to the ears of all the bulls out there. The only problem, of course, would be that the bulls will be too afraid to do any buying when the right time is here. They'll be fearful of the market that has allowed the spread to get under 20%.


With fear being the greatest of all emotions, with the stock market, not to mention real life on many levels, it will take a very long time for the bulls to get over their fears about many never coming back, after getting crushed throughout the correction. Froth stocks being the culprit as they have been slaughtered, with the masses getting stuck in them as usual. It never fails. Wash, rinse, and repeat sadly. It has been this way for forever, and probably will remain the path of least resistance for decades to come, if not longer. Sentiment is getting crushed folks. Applaud it. Don't get too frustrated over what's been taking place in the market. It's healthy and necessary. Now give us another month, or so, of overall bad performance and the market will be close to its next strong move higher. A sustainable move at that.

With the Dow down nearly 1,200 points, since January 1, we may be seeing a pause in the action to the down side, but I wouldn't take that to the bank. We could just keep on falling, and falling hard, but with the Dow now down to the 200-day exponential moving average, and with its RSI hovering at 30, it would make sense for the bears to take a quick break to catch their breath. We've had three days of playing with those 200's on the Dow, but after a small close below it on Monday we've flashed long tails from below the past two days.

That should mean the bulls are catching up a bit to the bears, but again, I wouldn't bet heavily on that being the case. It just makes sense, but when corrections are under way they can gain huge momentum and stay oversold even on the daily charts. My guess is a bounce, but we shall see. If we do bounce, the energy for sustainable upside isn't there beyond a couple of percent. The S&P 500 could back test 1770/1775, or even a bit higher. That's again, no guarantee. The Dow could move up a few hundred points, but that won't be easy. Nothing will be easy for the bulls for quite some time, but in the very, very near-term I'd go a bit easy on shorting. We shall see.

When it's time to buy heavily again at some point down the road the majority of you won't want to do it because you'll be thinking that we're probably in a bear market. And who knows, maybe you'll be right. But I don't think that'll be the way it truly is. The emotion of the game can keep the majority out of the good times when it's time to go aggressively long out of fear, but let's try not to let that happen when the time arrives. It won't be easy, but let's try to capture as much as possible someday down the road.

For now the only way to play is with very little aggression. Nice and light is the only way.

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!

© 2014 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