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
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
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Trading Back and Forth, Unwinding Nasty Divergences

Stock-Markets / Stock Index Trading Oct 01, 2009 - 02:04 AM GMT

By: Jack_Steiman

Stock-Markets

Best Financial Markets Analysis ArticleThat's all we're doing while trying to unwind those daily charts along with those nasty negative divergences. We go up. We go down. We go back up and then back down all in the same day. Tremendous whipsaw in wide and loose triangles as the bulls and bears fight it out between 1045/1080.


In a given moment the bulls look like the winners and in the next breath the bears look like victors. Back and forth and in the end, no one is really emerging out on top. Maybe it'll take the big jobs report on Friday to finally get a winner in this high stakes game. Maybe it'll happen tomorrow but it looks as if some critical economic report may be the culprit as to what level goes first.

A real bad report Friday and I think we're in deep trouble. A real good one and we could blast up. It's unfortunate to be in a market and try to make money when it's so fragile. When one report can make such a huge difference and why we're playing so tepidly. I have very little confidence in anything here. Sure, we are getting some unwinding on those daily charts but that doesn't mean they can't go down much further thus allowing 1045 to break first.

To be precise, the number should now be 1047 as the 20-day exponential moving average is moving up slightly each day towards price. These are very dangerous times to be playing with any aggression.

The Dow moved up and down today almost 400 points. Things are getting violent my friends. Both sides are nervous. The range is only 3.5% wide. Not a whole lot of leeway. One event can change things dramatically. So anxious bulls and bears are in and out and in and out and doing it over and over again.

No one has confidence. One thing can be said with certainty. Which ever way this breaks, expect a very powerful move behind it. If we lose 1047, the S&P 500 could see the 50-day exponential fast, 3.5% lower. No fun. If we take out 1080, we could see 4% higher very rapidly. Bears will hate. Understand what's at play here and adjust your playing accordingly.

We started out with a move higher today when we saw some decent, although unspectacular, economic reports pre market. A good GDP with a fair ADP jobs report, which is the precursor to the big jobs report on Friday. It is supposed to give us a good idea about what to expect.

We moved up towards the bottom of that S&P 500 gap when we suddenly saw some wicked selling programs hit, taking the market down very hard and very fast. A nearly 200 point drop only to be followed by an amazing hammer back up of well over 100 points. With an hour to go, we saw more wicked selling followed by some buying back off those lows. An incredible day that saw nothing actually take place of any consequence because neither side made any real strides towards getting their number cleared. We ended up closer to the bearish resolution but that means very little in such a narrow trading range.

Dollar was weak yet again today and this is definitely on the side of the bulls. The RSI on the UUP chart got back to 50 where it seems to turn down. The UUP chart just can't clear that hurdle and thus when it closed near 50 yesterday it gapped down this morning, pushing the RSI on the daily chart back decently below 50, or in other words, keeping the UUP in a very bearish trend, which is why it's hard to get too bearish on the market overall.

Scary to watch how the dollar is just eroding away.

Every move up gets smashed back down with force. Every time it looks as if the dollar will have its day, it doesn't. If the UUP can close over 23.25 it will be back in an up trend and that would be very bearish for stocks. That's not happening at the moment unless some surprising news comes out of left field.

Bull markets, when defined, are said to be so when they hold the 20-day exponential moving average on pullbacks. We have now had two attempts on that level on the S&P 500 and Nasdaq, and one try on the Dow, the weakest index in the stock market. Tails off those 20's have been the name of the game thus you just can't get too bearish quite yet. These 20's are just the first decently important support levels. It gets far more critical below them, such as the 50-day exponential moving averages, but we can't get through the 20's right now so we need to focus on those 50's for now.

If we lose the 50's the game is over for the bulls. Again, not to think about for now. You could say that the 20's are being used to keep things from getting too bad in terms of price depreciation while allowing the oscillators to unwind. It's working for now. Again, 1125 can't be ruled out. If 1080 goes, we could melt up short term. At the same time, the daily charts look nasty thus you can't count out 1047 going away first.

I'm not trying to be cute here. This is extremely tough in these ranges. Cases can be made for both sides. So for now the bull remains in tact. Do not get aggressively long. I still wouldn't short until we can lose the 20's and fail on a back test to get through.

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