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Stock Market Rally Won't Quit...Yet...

Stock-Markets / Stock Markets 2014 Apr 22, 2014 - 10:42 AM GMT

By: Jack_Steiman


And why should it? Just because sentiment is poor, and the weekly and monthly charts look awful, doesn't mean we should fall, now does it? I mean, don't we need a real reason to fall? Poor charts just isn't enough it seems. Ms. Yellen, and those low rates into perpetuity, just won't allow a real correction. Not yet, anyway. Sure, we have a bear market in froth, but we don't have even a real correction in the overall market. Market continues to find rotation as the name of the game. As long as that exists we won't fall very hard. Lower P/E stocks with solid earnings are holding this market up. Folks don't want to leave the market, they just want to place their money in the land of safety.

The Fed is protecting this very long-term market with low rates. She has made it very clear that low rates near zero will be with us through 2015. At the very least. There's no accident in that reminder she seems to send out every other week. So, with the Fed keeping rates this low, we are finding rotation, until, I gather, those froth stocks can find some type of real bottom. They are impossible to call right now, but again, the onus is on the bears to create the technical damage needed to move this market appreciably lower.

We started out quietly higher this morning with the Nasdaq leading early on. After the Nasdaq reached up about twenty points it fell hard, moving down thirty points in a hurry to a minus reading for the day. Things looked bad, but once again buyers came, and slowly, but surely, we crept back up for the rest of the day, gaining back to the levels we saw early on. When studying those daily charts, especially the Nasdaq chart, we see a deeply compressed at the bottom MACD that suggests we can back test the 50-day exponential moving average at 4172. We closed at 4121.

There's no guarantee we get there, by any means, but the MACD suggests the possibility to be sure. With the weekly and monthly charts as they are, and with sentiment still a bit of a headache, falling from any level at any point can't be said to be inappropriate. Things are set up to fall, thus, you must respect that as a reality. With the S&P 500 and Dow already well back above their 50's we can possibly hit new highs on those indexes if the Nasdaq does, indeed, make it up to its 50's. Today was yet another quiet, choppy day that makes it tough on all traders, but in the end, another small day up. Nothing bearish yet.

There's not much more to add folks. It is what it is. I don't know, at this point, what the catalyst could be for the correction to get under way, except for additional very bad news overseas, or terrible earnings news. The news on the earnings front hasn't been wonderful, but it has been far from terrible as well. Netflix, Inc. (NFLX) was up nicely tonight. There just isn't much for the bears here at this moment in time. Avoid froth and pick your spots is all you can do in this very tough environment.



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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