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
Investing in the METAVERSE Stocks Universe - 8th Dec 21
Stock Market Sentiment Speaks: I Expect 15-20% Returns For 2022 - 8th Dec 21
US Dollar Still Has the Green Light - 8th Dec 21
Stock Market Topping Process Roadmap - 8th Dec 21
The Lithium Breakthrough That Could Transform The Mining Industry - 8th Dec 21
VR and Gaming Becomes the Metaverse - 7th Dec 21
How to Read Your Smart Meter - Economy 7, Day and Night Rate Readings SMETS2 EDF - 7th Dec 21
For Profit or for Loss: 4 Tips for Selling ASX Shares - 7th Dec 21
INTEL Bargain Teck Stocks Trading at 15.5% Discount Sale - 7th Dec 21
US Bonds Yield Curve is not currently an inflationist’s friend - 7th Dec 21
Omicron COVID Variant-Possible Strong Stock Market INDU & TRAN Rally - 7th Dec 21
The New Tech That Could Take Tesla To $2 Trillion - 7th Dec 21
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Critical Support Holds

Stock-Markets / US Stock Markets Sep 29, 2009 - 03:25 AM GMT

By: Jack_Steiman

Stock-Markets

I talked about the first important, though not critical, support level on the indexes being the 20-day exponential moving averages. We tested down to those levels late last week but held and closed right near them. The key was to see if we were in a more immediate selling phase or not, which would be known by how the market responded today. It left little doubt about where we are on the journey.


The market held and it looks as though the bears may need a little more time before getting what they want out of this market. Now, by no means am I suggesting that we blast off from here. Probably not but more upside seems very realistic now that we had this impulsive move off the 20-day exponential moving average. The key was the advance-decline line today and that's what makes it a bounce to believe in. If the move had been on mixed advancers to decliners then you'd have to be very leery of the move up today.

However, when we glance at the numbers we can see that numbers were good thus it was a fairly widespread advance off those 20's. 29/8 advancers over decliners on the NYSE and nearly 20/6 on the Nasdaq. That's something you can dig your teeth in to and say a larger market decline is probably not upon us quite yet. That's likely some weeks from now but not quite yet.

The futures were lower last night as Asia was taking a pretty big hit. Our futures were taking it on the chin a bit until Europe opened up with market gains thus our futures turned around quite dramatically and held those gains going in to the open of trading. It wasn't a huge open higher, but it was higher nonetheless.

As the day progressed the buying intensified. There just weren't any real selling episodes. An upgrade to buy on Cisco Systems, Inc. ( CSCO ), a market heavyweight, helped the averages advance nicely. Once that stock gapped up, it made it more difficult for the bears to get any traction going. As the short term charts became a bit overbought we saw some late day pullback but still a close well above the morning gap up, which is more bullish short term than bearish for sure, although we can always have small pullbacks at any time.

The volume was lighter today due to the Jewish holiday. Again, that doesn't take away from the solid internals printed across the board. The 20's held when it seemed they were about to break, and thus, today's action says patience if you're a bear and to hang in there if you're a bull as we should print higher overall prices over the next many days to a couple of weeks.

So let's spend some time and go over the levels of support and resistance that mean something to this market and thus you're trading habits. On the S&P 500, we closed at 1062. 1075 is the recent high and 1080 is the top of that October 2008 gap. Some very formidable resistance very close together always makes breaking through more difficult. If we clear those levels, 1125 is next. Support is at that 20-day exponential moving average at 1045 with gap at 1018 and 1013 being the 50-day exponential moving average. For now, focus should be on the 20-day at 1045.

On the Nasdaq, we closed at 2130. Resistance is at 2155 or the top of the range with support at the 20-day exponential moving average at 2086 and rising daily. 2101 is now gap support as well. Today was a good day for the bulls adding that gap in to the mix. The Dow, the least important index, closed at 9789. It has support at its 20-day exponential moving average at 9642. Up side isn't just going to be a walk in the park here folks. For now, down side action should be contained. Watching S&P 500 1075/1080 for breakout thoughts and watching 2155 Nasdaq for the same. 1045 and 2101 down to 2086 are support for the S&P 500 and Nasdaq to watch for respectively.

When the market goes down as heavily as our market did for seventeen months, when it bottoms, it usually bottoms with a strong move higher as we have seen. The problem is, understanding how high it actually can go. It is not unusual for the market to retrace back up 50% off those lows made once the market bottoms. The reason for such large gains is due to the incredible pessimism created along with the degree of oversold reached. Sentiment gets to levels rarely seen thus oversold gets to levels rarely seen and this can give markets a boost of 50%. 1125 is roughly that level thus the reasoning for thinking that level is possible although, by no means, a guarantee.

The market can suck you into thinking that level is guaranteed once it gets this close but I don't live to that. It is possible, yes, but I won't run in loaded up saying it's a guarantee. Again, some long exposure is appropriate but we are getting near levels that will top this bull out, at least for the short term. Remember, even if we get to 1125, that's only 6% from here. The majority of this bull run has been made. This is crumbs land. The gains won't come as easily. More pullback's and down days in between the up ones. Makes things more emotional.

For now, longs seem the way to play. The next big move is likely down once we top out in the next several days to couple of weeks.

Again, longs only for now.

That will change folks.

Peace
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

© 2005-2019 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