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
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
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
STOCK MARKET DISCOUNTING EVENTS BIG PICTURE - 31st Jan 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 Froth Annihilated...Money Moves Around.....

Stock-Markets / Stock Markets 2014 Sep 16, 2014 - 09:52 AM GMT

By: Jack_Steiman

Stock-Markets

If you were a high-beta stock, or a four-letter stock with froth behind its name, you were slaughtered today. Little mercy out there for those who recently bought a plethora of stocks in the world of the Nasdaq or small cap stocks. The carnage across the board, yet the market didn't fall very much except for those areas. Some sectors were slightly green. Money refuses to totally leave as the big boys were transferring their dollars to those lower-beta, higher-dividend stocks. No mass exit yet. It can't be argued. Many stocks, the leading stocks in the Dow were up overall. The Fed still is making her actions felt for the bears. The low rate environment allowing transference of dollars.


Of course some days the bears will have their day, but at least they had a feast in the Nasdaq today. Stocks such as Netflix, Inc. (NFLX), Tesla Motors, Inc. (TSLA), and a boat load of others were just crushed today. As usual, out of the blue. No warning with the masses getting in at the top as evidenced by recent higher volume in the names killed today. It never fails. It truly is wash, rinse, and repeat for those who can't help, but always try to chase greed. A sad reality, but the lessons will always be there. New folks will have to be taught the same lessons over time, while the ones getting hit now are moving on with their lives in a different direction. So, while today did show nice action in the big cap lower beta, higher dividend names, the froth world was handed a terrible lesson in greed. Overall action was not bad, but many feel as if the whole market crashed today.

Every eye and every ear will be tuned in to the Fed Yellen's statement on Wednesday is at approximately 2:00 PM ET. Will she hint at raising rates? Will she hint again that rates aren't going anywhere higher any time soon? What will she say about the risk of inflation? And the beat goes on. Her words are going to be huge in terms of market direction. Wednesday could be insane with volatility. Huge moves, potentially, both ways. She's under some pressure to start raising rates for fear of run way inflation, but she's also under immense pressure to keep the markets higher for if it falls hard she fears losing the economy. That's what keeps her up at night.

The fight between inflation and losing the stock market, which means losing the economy. I think she wants the market up as much as possible for now. I don't think she fears the inflation risk enough at this moment in time. Why? Because of her recent words and actions. She's not acting fearfully about inflation because her actions scream of protecting the economy in any way possible. We shall see. Maybe she's about to change her mind, but I don't think so. The question then becomes, does the market even care at this point about anything she does? Is it simply ready to sell no matter what due to froth? So many unknowns. Just be aware of all possibilities. Don't play where the damage will be greatest as seen by today's action in the Nasdaq. Wednesday is going to be huge and probably very wild. Buckle up.

Since the Nasdaq is leading down we watch to see how it handles massive resistance or the 50-day exponential moving average at 4477. The second test of the 50's is close to being upon us. Last time we lost, it started back testing with gap ups, and, thus, where we are today. A loss of 4477 would give the bulls less of a chance of recovering those lost 50's. It's just way too soon to speculate, but we watch 4477 very closely. If that goes away and froth loses critical support it's likely the rest of the market will fall as well, although probably not as hard as the Froth world of the Nasdaq stocks. 1972 the 50-day exponential moving average on the S&P 500, and if we see both the Nasdaq and S&P 500 lose their 50's the selling should, I say should, accelerate.

For now, we know the importance of Wednesday, thus, you should adjust accordingly. Do what feels right to you of course but understand risk heading in to this key fed moment.

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.

Sign up for a Free 15-Day Trial to SwingTradeOnline.com!

© 2014 SwingTradeOnline.com

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 http://www.MarketOracle.co.uk - 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