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The Stock Market Different Book Theory.....

Stock-Markets / Stock Markets 2015 Jun 02, 2015 - 11:53 AM GMT

By: Jack_Steiman


The market has no trend you can count on. It's been that way for a drop over six months now. When a market is in a trend you can count on, technical analysis flows. Charts flow in a rhythm. When there is no trend there's no flow meaning you can look at a chart and say you think it should do one thing, but you can't count on it, because the lack of trend is like opening a new book each and every day. A non-trending market equals a market of frustration and a lack of consistent action, thus you need to keep your expectations down big time. Not over play because so many set-ups simply won't work. They may look good, but you can't count on getting out of it what you see on a given day. A different book is what causes the biggest losses as many get caught in the moment, with what seems to be rather than losing that expectation.

It looks good, thus, it will play out favorably. Not necessarily. Not by any means. You need to play more from fear. You need to recognize what having no trend in place equates to. We can all wish this away, but since we're nearly at the same price we were in late December, you should cool off your expectations on just about everything you see at the close of any given day. Deathly charts can turn beautiful the next day and great charts can turn around and head south in a hurry. Again, no rhythm is a non-trending market. Respect that message since it has been this way since late December. The market has sent a message for all to hear if you tune in. Stay on the right dial. When the market turns directional one of these days you can play the same book as it flows. Right now there is no flow at all. Adapt and adjust to this reality for the sake of your portfolio.

When I study the daily chart, we all know it's in this ridiculous base but we have to try to see what the bigger picture may be saying, although what I've written above makes that unreliable. However, it's my job to try and dissect it the best I can and when I study it there really aren't any excuses for the bulls. The new breakout area has been extended to a double top at 2134 meaning we need a forceful, higher volume close above 2134 to get more excited about a directional move finally trying to kick in with some gusto. The oscillators are always key on those daily index charts and they're nothing, but solid if you want to play the home game of HOPE!

Inconsistent markets only allow for hope, so if I choose to play that game there's a lot of room on those daily index oscillators for higher prices to be created without getting overbought. In a normal environment I have to admit that the set up would have me on the bullish side of the ledger. It's rare for the bulls not to take it when it's there but they surely are not taking it right now although they're far from giving it up as well. The next many days will be interesting if nothing else. The bulls should be able to take it based on what I'm seeing but I have no confidence in saying that until they can prove it. That's what six months of mindless meandering will do to you. I'll believe only when I see it. It's there for the taking. Will the bulls take it? We will know soon enough. Or not!

The transports are what everyone is talking about these days. You know I believe they're incredibly over rated in terms of predicting what the market will do. We have proof of that since it has underperformed for quite some time now while the market has overall trended higher. Too much Dow-theory nonsense in my book, but it always helps to have key sectors participating. With rotation we surely have had enough of them pulling their weight but not he transports. They had a great reversal day off of very oversold daily conditions and this gives hope for an overall rally to continue. Not every day, but hope of more of an uptrend overall. If this sector can impulse up on its oscillators on a continued short-term rally, and then pull back lightly, the lows may be in. We shall see and it's way too early to predict but there's some hope there.

Most other important sectors are hanging, and that's always the bigger picture key, not just one sector, but maybe we're now beginning to see a reversal in those nastily behaving transports. A day at a time as always in this nowhere market.



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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© 2015

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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