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Russia Stock Market Excuse To Sell.....

Stock-Markets / Stock Markets 2014 Mar 04, 2014 - 10:20 AM GMT

By: Jack_Steiman


Mr. Putin has taken some aggressive action moving into the Ukraine. It seems highly unlikely he'll do too much since he's getting tremendous political global pressure. But the very fact that he's taken action is a built in excuse for the market to sell based on sentiment. If sentiment wasn't an issue we would likely have gone green today. Markets don't take these issues too seriously when it seems doubtful it will escalate into anything too serious. Of course, if the market thought it could become something uglier it wouldn't matter what type of market we're in right now. It would sell, but that doesn't seem to be the case here. The market could definitely use a pause in the action. That said, you don't get bearish just because we need something. You don't know when that issue of removing too much bullish behavior will take place.

Selling today doesn't mean selling of any major magnitude tomorrow or the very short term. Markets find a way to get where they need to go when they want to get there. Today caused some technical damage for sure, but it wasn't a blowout downside day as many thought it would be based on how much the foreign markets were down. They took much nastier hits than our market did. The United States still is the best and safest place for sure. We did fall below 1850, but we're still well above critical support levels I'll talk about later. What the market is saying is don't be aggressive to either side for now. Lots of cash is a strong and an intelligent position. A little here and there is fine, but avoiding froth seems the smartest way to play. The bears had a good day, but they still haven't done anything to destroy the bigger picture. Again, just be smart and keep it light until we can see more action in the days ahead.

Sentiment is my biggest and only real concern for this market in the very short to mid-term. We had been dealing with too many bulls over bears for quite some time. The number reaching a ridiculous 46% more bulls to bears. This began a pullback of between 5-8% on the Nasdaq 100 to the Dow respectively. Once the pullback was over, and with the spread down to 24.4%, the bulls rushed in. Now it's entirely possible that when we get the number this week the spread will be back near 40%.

Simply stated, not good. No one needs to see those numbers if you're a bull, and if we are near there we are going to need more fear at some point. You don't know when, but at some point the market will once again teach a nasty lesson to those who are too aggressively long. Once you reach 35% you have a strong red flag up. Once you get to 40% you have reached the get-out-of-the-market level, so we have to be more than careful for a little while. Timing the bigger move down is nearly impossible, but this level screams for safety. Adhere to that truth.

1830 is the 20-day exponential moving average. 1815 is the key 50-day exponential moving average. Only if the bears can say goodbye to 1815 should the bulls become quite a bit more safety oriented. It's all noise for now. Back and forth we go. When we start to rock up and break out we see tepid action and then failure. No different on the down side. Lots of chop and failure there as well. All of this tells us to not get overly involved on either side. I know it's not a lot of fun being heavily in cash, but that's the message for now. I wouldn't ignore it.



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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© 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.

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