Best of the Week
Most Popular
1.Stock Market Crash and Recession Indicator Warning: Extreme Danger Ahead - Harry_Dent
2. Is This How World War III Begins, In Almost Complete Silence? - Jeff_Berwick
3.Trump Wins 2nd Presidential Debate, Betfair Betting Markets Odds Bounce - Nadeem_Walayat
4.Why Krugman, Roubini, Rogoff And Buffett Dislike Gold - GoldCore
5.End of SPX Stock Market Correction Nears - Tony_Caldaro
6.Get Ready for the Future - Exponential Machine Intelligence Mega-trend towards Singularity - Nadeem_Walayat
7.US Housing Market Bubble II – It’s Happening Again! - Andy_Sutton
8.FTSE BrExit Stock Market Panic Crash Resolves towards New All Time Highs - Nadeem_Walayat
9.Can Trump Still Win Despite Opinion Polls, Bookmakers and Pundits all Saying Hillary has Won? - Nadeem_Walayat
10.Gold’s, Miners’ Stops Run - Zeal_LLC
Last 7 days
Stock Market Investment Success Through the “Investment Rule of 72” - 21st Oct 16
The Final Bottom in Gold - WHEN - 21st Oct 16
Gold Green Lights Upleg - 21st Oct 16
Demand for US Mints Silver Eagles has ‘Returned with a Vengeance’ - 21st Oct 16
Central Bankers Can't Stop The Death Blow Of The Post US Election Recession - 21st Oct 16
The Fortune at the Bottom of the Pyramid: Golden Opportunity for Frontier Asia - 21st Oct 16
Have You Taken These 4 Simple Steps to Improve Your Trading? - 21st Oct 16
The Stock Market is an Accident Waiting to Happen - 20th Oct 16
It's Rally Time for Gold and Silver Equities - 20th Oct 16
Cashless Society – Risks Posed By The War On Cash - 20th Oct 16
China's Insanely Leveraged Housing Market Will Enter Its Secular Bull Market In 2017 - 20th Oct 16
Donald Trump Bounces Going into 3rd and Final US Presidential Election Debate - 20th Oct 16
Attention Please: Phase Two of the Gold and Silver Train Now leaving the Station. All Aboard? - 19th Oct 16
How to Successfully Trade a Stock Market Crash - Black Monday October 19th 1987 - 19th Oct 16
Tesla, Apple and Uber Push Lithium Prices Even Higher - 18th Oct 16
Silver, Debt, and Deficits – From an Election Year Perspective - 18th Oct 16
UK Property Market: Slow Growth Does Not Equate To Decline - 18th Oct 16
Trump Election Victory is in Your Power - 18th Oct 16
Stock Market More to Come! - 18th Oct 16
This Past Week in Gold and Silver - 17th Oct 16
A Falling Stock Market Cannot Be Allowed - Financial Repression Is Now “In-Play”! - 17th Oct 16
Commodities, Forex and Stock Market Trend Forecasts - 17th Oct 16
Stock Market Crash..or No Crash? - 17th Oct 16
A perspective on risk rally – Risks abound but Stock Market is Confident - 17th Oct 16
Bank of England Blames Brexit for Sterling Drop Inflation, Masks QE Money Printing Cause - 17th Oct 16
From Piety to Pride to Pity, America's Racial Divide - 17th Oct 16
Is Obama Juicing US Government Spending To Get Hillary Clinton Elected? - 16th Oct 16
Seek Your Independence: Anything Else Will Destroy You - 16th Oct 16
SNL - US Presidential Debates, 1st, 2nd, VP - Like You've Never Seen them Before! - 16th Oct 16
End of Economic Growth Sparks Wide Discontent - 16th Oct 16
Donald Trump on Life Support, May Abandon Election Campaign and War on Republican Party - 15th Oct 16
The Gold Manipulators Not Only Will Be Punished, They Have Been Punished - 15th Oct 16
Black Votes Matter - Is the US on the Verge of Mass Race Riots? - 15th Oct 16
Gold Stocks Screaming Buy - 14th Oct 16
Brace Yourself for the Quadrillion-Dollar Reckoning - 14th Oct 16
The Next Recession Will Blow Out the Budget - 14th Oct 16
John Mauldin: My Infrastructure Plan to Save the US Economy - 14th Oct 16
World War III On The Brink: War Will Continue Until It Triggers Economic Collapse - 14th Oct 16
US T-Bill Rejection At Ports In Progress - 14th Oct 16
These 2 Debt Instruments Pose Peril to Millions of Investors - 14th Oct 16
China’s Rocketing Housing Market Real Estate Bubble - 14th Oct 16
DIY Winter Home Maintenance Money Saving 22 Point Checklist to Get Ready for Winter/Fall - 14th Oct 16
US Stock Market, Big Picture View - 13th Oct 16
Stock Buybacks Main Force Driving Bull Market; Rewards Investors and Starves Innovation - 13th Oct 16
SPX Gapping Down... - 13th Oct 16
Syria - Obama Stepped Back From Brink, Will Hillary? - 13th Oct 16
The Structure and Future of Gold in the Investment and Monetary World - 13th Oct 16
Can Trump Still Win Despite Opinion Polls, Bookmakers and Pundits all Saying Hillary has Won? - 12th Oct 16
Gold and Crude Oil - General Stock Market Links - 12th Oct 16
Samsung's Galaxy Battery Just The Tip Of The Iceberg - 12th Oct 16
Hillary: Deceit, Debt, Delusions (Part Two) - 12th Oct 16
Gold and Silver Metals Show Strength Relative to the USD Index - 12th Oct 16
Announcing Trader Education Week -- a Free Event to Help You Learn to Spot Trading Opportunities - 12th Oct 16
Confirmed Stock Market Sell Signals - 11th Oct 16
Hillary Deceit, Debt, Delusions - 11th Oct 16
Trump Support Crashes to New Low of 6.4 on Betfair Odds Betting Market - 11th Oct 16
The World Is Turning Dangerously Insular - 11th Oct 16
An American Tragedy: Trump Won Big - 11th Oct 16

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

LEARN to Trade

Economic News Gets Worse... Stock Market Sentiment Unwinding....

Stock-Markets / Stock Markets 2016 Feb 25, 2016 - 05:24 AM GMT

By: Jack_Steiman


Lots of bad news for the bulls today as the bull-bear spread blasted up from -13.5% to just -1.0%. A 12.5 move of bullish behavior and thinking. Then to add to the bad news we saw the flash ISM Services Report, or the preliminary report, come in below 50.0 for the first time in three years. Down nearly 4% month over month, which shows a very strong decline in the overall economic activity for our country. The services sector had been holding up better than the manufacturing sector, but it is clearly playing catch up. This is the worst possible news for our economy, to be losing the last piece of hope for an economic recovery. Bad news on sentiment. Bad news on our economy in a very big way, and the result is a nice blast higher in our markets after gapping down nicely and running lower after we opened up for trading. Would you expect anything else?

As I always tell you, it's never about the truth, but about what the market wants. That's the tricky part of all of this. You have to turn off reality when you're playing this game. So today we saw an amazing reversal off the lows, which has set the market up for what should be somewhat higher prices. How high, I don't know for sure, but I could see 1970-2000 on the S&P 500. No guarantee whatsoever, but things are set up for higher prices short-term. Long term, the game is going to be far more difficult and frustrating, but for now today's action makes the short-term seem and feel more favorable. Oscillators confirmed things. The move down didn't push the MACD, down and that's what I hoped to see.

All we can do is play what we see and not what we know to be true. Even then there are no guarantee's but the set ups are there. Let's hope they play out appropriately. Sentiment really unwound this past week. Complacency already starting to show up across the board. A 12.5% push up in one week is amazing. That said, we're still below zero on the number, and that type of number is still favorable for a while longer for the bulls. If it should get towards 10-15% then things become a bit more agnostic short-term, but right now we don't have to worry about the reading, even though it's already starting to show how fast folks want to get back involved. The market over time should be studied hard with regards to sentiment extremes.

Most of the time it's a waste of time to include sentiment in to your thinking process, but when you get to below -10% on the reading for two consecutive weeks, you begin to realize just how many shorts had blasted in to the market. When there's too many shorts, the game of reality moves further and further away, since the market will now respond to short covering over true economic news. Shorts don't hold their positions very long, since they know markets go higher most of the time. The average short hold, I believe, is under two trading sessions. I think longs hold twice as long, thus, the game is always against the bears. Since they were loaded up as high extremes, it shouldn't be a shock that we are moving higher short-term. Sentiment is now the friend of the bulls very short-term. That will go away in time as always.

Here's the key for the short for the bulls and the bears. The S&P 500 has made a double top at 1947 from February 1 and February 22. The bears don't want this level to get taken out. If it does, they will be forced to, once again, cover additional short plays. That would be the fuel for further upside for the bulls. 1891 is now key support on any selling to come. If we do clear 1947 with a bit of force, like I said earlier, I could see us challenging close to S&P 500 2000, before things get very tough for the bulls again. We take this one day at a time and we make sure we, ourselves, do not get complacent. Let's hope for a gap up in the morning.


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!

© 2016

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.

© 2005-2016 - 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

Catching a Falling Financial Knife