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

Stock Market Will We Ever Sell......!..Froth Ramping Again...

Stock-Markets / Stock Markets 2014 Aug 28, 2014 - 11:11 AM GMT

By: Jack_Steiman


Of course we will, and the market is set up right here to do so, except thus far it hasn't. Three straight days of daily-chart topping sticks across all the major indexes. It hasn't mattered. The market refuses to sell. It really should from here. Overbought and negative divergences and major froth and.....! You get the idea. At least a small pullback, one would think. So today we were set-up to sell, and although we tried to really sell-off late in the day, over the last thirty minutes the Spy was able to rally back up and barely finish in the red.

The moment those short-term sixty-minute charts unwind out of overbought it seems the bid comes right back in. Nowhere near getting oversold. You go from 70+ RSI's down to the 60's or 50's, and then the buyers come in. Really interesting to watch as it seems forced by someone, but maybe I'm just over thinking things. Deep down I know it's about rates, but it's so interesting to see how difficult it is to just get the sixty minute index charts down to oversold for a moment or two. Froth still ruling the roost, while froth needs a lesson, but rates are still not letting things go lower for the short term, although, of course, we will sell.

Froth is back past the double red flag warning I use. Any time you get the bull-bear spread above 30% you start thinking things are risky in the market. When you get to 35%, or higher, it's a super warning alert about the probability of things falling hard in the near term. That hasn't been happening, and I know it's because of rates being so low, but after getting things down to 30.3% two weeks ago we raced back to 33% last week and now 37%.

I was really hoping we would run lower in the markets, and then we would see readings in the teens over time which would set things up for longer term. Sad to see froth never letting up, but I guess rates are more powerful than froth for now. Another breakout higher in the days or weeks to come and we will see 40%+ again and that's really not good. I know we all want higher stock prices, but you don't want another bout of 40%+ on the bull-bear spread. It's not good for mid- to longer-term. I guess it will be what it will be. All we can do is play what we see, and not worry about what we can't control. Froth remains a real thorn in the side of the bulls long term.

So how does one approach this market? Carefully! Respect the warning signals but clearly, for now, weakness can be bought. That's the key. Buying either market weakness or an individual stocks weakness. Chasing any vehicle higher makes little sense, since there's so much risk in the market currently. I still feel it's best to avoid massive froth plays with P/E's through the roof, or if they have no P/E at all. These plays can and do work here at times but knowing how risky they are is key because when markets do sell off, these are the ones that take the nastiest hits lower.

There are lots of support levels just below between gaps and moving averages, thus, for now, use weakness to enter, but never lose the realization that out of nowhere, and without warning, things can go south in a hurry.



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