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
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 Breaking Above 2085 S&P 500.....Barely...

Stock-Markets / Stock Markets 2016 May 26, 2016 - 11:04 AM GMT

By: Jack_Steiman

Stock-Markets

A breakout is a breakout and the S&P 500 did close above 2085. It doesn't meet my personal criteria of a breakout, which means a move above by at least a half percent, but you never argue with an index breaking above an old level of resistance, even if it didn't do it forcefully. The only problem with this five-point move above 2085 is we're coming off extremely overbought short-term conditions, thus, we could lose that level right back in the short-term. If we do it's not the end of the world, but just be aware that we're still over 70 RSI's on all the short-term index charts after having readings that averaged 80 during the trading day. The markets overseas were higher after more bail out dollars were handed out in the Euro zone.


More bailouts equate to more froth, which means higher futures, and, thus, we were off to the races today. Not quickly, but after a little time the momentum picked up allowing us to clear 2085. We held slightly above the rest of the day with a close off the highs as we started to unwind those very overbought conditions late in the day but again, holding above 2085 at the close. So now it gets more interesting as the bulls will want to try and hold 2085, even though we are overbought. Can they do it? I never say no to the bulls, but it won't be easy as there's more oscillator unwinding to go. If we stay overbought the unwinding will be that much harder in time. In bull-trends you can work off overbought with little price erosion, and that will be the goal for the bulls short-term. A solid day for them. A bad day for the bears. Nothing unusual there even we never really seem to go anywhere bigger picture.

Housing starts are exploding due to those low rates the Yellen has held in place seemingly forever. An unintended consequence can be a housing market that gets too hot due to those low rates for folks who really shouldn't be buying based on their financial situation. Sound familiar? It should. This reality will likely prompt her to speak from a more hawkish perspective when we hear her latest speech this coming Friday. If you blow up a bubble they will come. And come they have, and I'm quite sure she's not happy.

I believe Ms Yellen would even like to see the market cool off some. She had some of her fellow Governors speak last week, saying they're worried the market isn't taking the rate hikes seriously enough. They want things down some. They know the low-rate environment bubble is starting to get out of hand. Her speech this Friday will be extremely interesting. I doubt she'll talk as if it won't occur, but she'll still be sure to tell us all that nothing on the aggressive side will be taking place any time soon. She'll talk data-dependent nonsense. Same old, but I do think she'll want to let us all know that her desire is to raise a bit more, and to do so sooner than later. Friday will be a very interesting day.

If we hold above 2085 we start to think about the latest high above that at 2111. Prior to that it was 2116, so there's a cluster in that five-point range. Beyond that lives the old high at 2134. While things look favorable for the bulls the daily charts, and especially those monthly charts, do have negative divergences. Maybe they won't matter, but they have to be respected, and, thus, make sure you give it the respect it deserves. If the bulls can fight their way through those negative divergences, then that's great. We take it a day at a time now. Don't get too aggressive, at least not until we get some unwinding short term, whenever that occurs.

Peace,

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!

© 2016 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