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

A Nasty Bear Market, Watch China's Shanghai Stock Market Index

Stock-Markets / Stocks Bear Market Jan 19, 2009 - 03:19 AM GMT

By: Jack_Steiman

Stock-Markets Best Financial Markets Analysis ArticleIn every nasty bear market comes a point where you have to rally for a while. It does NOT mean the market is in good shape. It does NOT mean the ultimate bottom is in. Nothing is straight down. So is this market ready for some type of rally that can last a while and not just collapse right out? The title tonight says it all. The Shanghai market had been leading up but has now been in a wedge that is basing out. It looks ready to turn up and make the move and should this happen, it should lead our markets higher for a while to give everyone some needed relief. The chart is included in tonight's newsletter. If China rocks some we should go along for the ride and there's technical reasons for that as well.


The daily charts on all the major index charts are very oversold. Stochastic's still in the upper teens or near 20. The doji at the bottom of the channel on Thursday also says the buyers may have finally caught up to the sellers after a deep push down of 1100 Dow points. The market is set up to move higher. You also saw that today when we sold off hard after being up early. The Macd on those 60 minute charts didn't budge lower and started heading back north after the market bottomed. Very positive short term action. I'd say the overall evidence points to a near term only move to the up side. As long as 817 Sp holds there's hope for some relief for the intense selling we just witnessed. Let's hope so. We can all use it.

-

The financial's continue to absolutely stink and this of course is the bad news. The market will need at least some participation from these group if it has any chance at anything more sustained to the up side. The bears run as fast as they can to those stocks whenever they need to put pressure on the overall market. You have to start wondering what's really left. Most of the big names are about gone. We have now essentially lost Citigroup (NYSE: C) and Bank of America (NYSE: BAC). All that's left is JP Morgan (NYSE: JPM) and Wells Fargo (NYSE: WFC). They both got hit again today but there's really only so much left to annihilate. These stocks are deeply compressed at oversold and just a small bounce in these stocks is all the rest of the market will need to get rocking somewhat higher short term. The leader, Jpm put in a long tail off the bottom today the same way it did at the November lows. Again, being so oversold, it has a shot to rally, even if it's just a little bit but that's all the market would need. Keep an eye on those stocks as well early next week.


Something that gives the market a little hope near term is the way the indexes put in those long tails yesterday at the bottom of their wedges. The bears had the bulls dead in the water yesterday. The bulls were able to hold the wedge with a strong close. It's never etched in stone but when you get a long tail from well below a trend line that holds a wedge in tact it usually means the market is going to move higher in the not distant future. The bears recognize that they have run out of gas at critical support are likely to cover and less likely to take on new short positions giving the bulls some rope. They will usually let the oscillators unwind once this has taken place and being we're still oversold, it's likely we'll be able to hold the line for a while longer. It's important to understand the power of these wedges. They take a long time to set up nad thus when they break it's normal for them to continue that trend. Yesterday's break and recovery was a huge save for the bulls.

This would have taken the sp down to the next support area at 775 which is where you're playing with fire if you're bullish this market. It took a lot of energy to take these wedges from the top to the bottom. The top of the wedge is near 8900 on the Dow so there's room for some additional upside before the selling would likely kick back in. No guarantees and if the Shanghai decides not to make the move then it's unlikely we'll move up all that much if at all but it does seem to all be coming together for a rally here short term. Those wedges talk. Now let's see if the bulls can muster some upside energy.

The overall health of the stock market remains poor. We held above the November lows but that's not something to get very excited about. The overall trend remains down, even if we were to rally to the top of the wedge at 8900 on the Dow. No one can be certain about what's coming. There's only calculated guesses based on what's setting up. The daily Macd's have unwound a lot and they better get rocking higher (impulse) if we do indeed get this rally short term. If they fail to do so on a rally that would speak volume about where things are. it would not paint a pretty picture. if they do impulse then you can be more hopeful.

I think the most important thing is to be market agnostic in as much as no matter what you think will happen, be open to what may be setting up. It may go against what you believe is coming down the pike and you need to adjust your thinking to the message the market is sending. I do think this market is in deep trouble longer term. I hope I'm so wrong. I will remain open to all possibilities as things set up over the coming weeks. I hope we can get this short term rally just to alleviate the pain that most are suffering. I hope the Macd's on those daily charts impulse their brains out. I'm not counting on it. Let's just traverse the course as it all sets up. One day at a time. Let's see if the Shanghai can lead us up here for a while.

By Jack Steiman

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 30-Day Trial to SwingTradeOnline.com!

© 2009 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.

Jack Steiman Archive

© 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