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
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

Fed There To Protect..... Overbought Stock Market Finally Unwinds.....

Stock-Markets / Stock Markets 2014 Feb 20, 2014 - 05:03 AM GMT

By: Jack_Steiman


Ok, back to basics folks. What is the job of the Fed? We've gone over this many times. The Fed has one job and only one job. To watch the stock market. When Wall Street is happy Main Street is happy. The Fed admits to understanding technical points of concern price-wise. They know when markets are in trouble, and their job is to make sure the market doesn't have too many troubles. Trouble on Wall Street means their stress level is on the rise, and that they will have to move into action. To change what they're doing. So in order to prevent that, they come out with many statements throughout each month to tell us all what they're thinking. They want to remind Wall Street as often as possible that they've got their back.

Ms. Yellen did that once again today when the Fed minutes came out at 2 PM Eastern Time. She said the Fed would adapt to changing market conditions. If the economy was weakening they would be sure to taper the taper and feed in liquidity, if need be. That just because they're tapering doesn't mean they wouldn't hesitate to add back more liquidity, if the economy once again showed major problems. The market loves this. It will continue to put a floor underneath any selling that will occur in the short- to mid-term. Make no mistake about it, we can and should sell decently from time to time. The bottom line in terms of those looking for a bear is this, the Fed will protect. With the Fed protecting, it's unlikely although never impossible, that a bear market will not be around for a while longer. Again, always pullbacks, but a bear is unlikely for now.

Today we finally saw some selling to unwind those short-term sixty-minute charts. They were getting ridiculously overbought. Unwinding was necessary, and that process is now well under way. Actually at neutral here. You want selling, and if you're patient it pays off. If you're impatient, you'll suffer the consequences, thus it's your own fault. Buying at overbought can work, but the risk reward is never great. With RSI's at, or decently above, 70 it was wait it out time. Now we're getting that unwind, which is perfect. You don't just run in once overbought is gone. You see how you pulled back and then make decisions as best you can.

There were some big breaks today in the land of massive froth. Incorporated (PCLN), Google Inc. (GOOG), and SolarCity Corporation, just to name a very few that took it on the chin today. Too many to count. Owning and buying at overbought often puts a few new traders to bed early with lessons they'll never forget. Nothing bearish occurred today. Just normal unwinding, with the excuse coming from a few Fed folks who said we should possibly raise rates soon. It won't happen, but it was a decent excuse. The next day, or so, should give us an entry, or two, we hope, but we watch and learn.

The 1800 area has solid support should we correct lower, which would be best if we did. It would be nice to actually see those short-term sixty-minute charts get oversold, while continuing to lower those daily charts on all their oscillators. Nothing bearish, thus far, but sentiment can still kick in at any time, creating some deeper selling than most think possible. We, as always, take it day to day as we learn by what's printed on price, and whether those prints are confirmed, or not, by the accompanying oscillators.

For now, keep things very light on either side.



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.

Sign up for a Free 15-Day Trial to!

© 2014

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 - 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