Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Gap Up Off Short-Term Bottom...

Stock-Markets / Stock Markets 2014 Oct 18, 2014 - 05:57 PM GMT

By: Jack_Steiman


The stock market never has never been easy. The emotion machine keeps chugging along making sure all of you have a difficult time understanding it. It doesn't want you to ever think it's easy, and it wants to make sure you struggle. Just about everyone does. When you look at the recent volatility it's easy to understand. Tremendous day-to-day moves off the recent top as the VIX exploded. The bulls and bears alike are more used to small grinding moves for several months, with the direction mostly higher. Now things have swung around, and the market is playing a different tune. Slow dance nights are over. The doji is playing rock music these days, and most folks just can't dance well to that music. Most folks simply get used to the new pattern in place and never adapt to what's taking place in the moment.

They're now used to a down trend since we fell two-hundred points on the S&P 500 in just twenty trading days, thus, they won't trust that we're now in the counter-trend portion of this correction and it should last a couple of weeks even though the gains may not be huge. Any selling off the top on an up-day makes them feel like we're about to crater lower. That shouldn't be the case. You know what's next. Just when they feel it's fine again to get aggressively long, the market will pull out the carpet and we'll head lower again. All in good time as, for now, we should be going up slowly but surely for a week or two or maybe even three but be reminded that it won't be up every day with some days not feeling good at all. It's still a market that begs for appropriateness. Nothing heavy or aggressive, and if you're going long, ETF's are probably the safest way to proceed. Day to day for now.

The real question on the mind of all traders is how high can this retrace rally go. There are no exact answers. Quite often they do a 50% retrace back up off the first strong leg lower. The S&P 500 fell two-hundred points, so if we go back up half of that we would see S&P 500 1920. It just so happens that a few points above that is the 200-day exponential moving averages at 1927, along with gap resistance at 1925, thus, I'm thinking we see that area in time, even if there are down days in between the overall move higher. When markets want a level they will find a way to get there, regardless of what has happened prior. There are no exact answers, and it's quite possible we'll retrace more than 50%, or somewhat less, but I'm using 50% due to the proximity of such solid resistance there. We'll know more as things unwind.

I do not believe the correction is over. I, of course, could be very wrong. Here's my thinking. I said once we hit the 1800's we would hear from Fed Yellen about the potential for more QE to be injected in to the banks. Right on cue, she didn't disappoint. My next crazy prediction is if, and when, we hit the 1700's on the S&P 500, she'll actually institute a new QE program. It will become a reality. She will do whatever it takes to stop the market bleeding. It will work ultimately. It's hard to know if it'll stop the selling at that point, but she will be there to announce it by the time we see those 1700's. She shouldn't do anything as the market is already doing the dirty deed as the selling has been the prefect medicine to unwind froth. We will be below 20% on the bull-bear spread when we get the new readings next Wednesday. If she stays away, we should be at, or near, inverted. We hope she leaves herself out of the game, but it's likely she won't.

Interesting times. Keep it light. Day-to-day.

Have a nice weekend!



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.

© 2005-2019 - 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