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. Priceline.com 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.

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.

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.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.