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
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Consolidation Extends...Bears Still Showing Little...

Stock-Markets / Stock Index Trading Dec 19, 2009 - 11:45 AM GMT

By: Jack_Steiman

Stock-Markets

Best Financial Markets Analysis ArticleThere are many things we can talk about when referring to the case that can be made by the bears. We have many leading stocks breaking down below their 50-day exponential moving averages. Goldman Sachs (GS) lost that level nine full points ago but is now starting to show some positive divergence on the Daily. JP Morgan (JPM), another financial stock and unquestionable leader, retested that 50-day exponential moving average and fell right back down with full red candle sticks, leaving little doubt as to the bears intentions on that issue.


Today we saw a downgrade on Potash Corp of Saskatchewan (POT) to sell, naturally adversely affecting Intrepid Potash (IPI), when it rains it pours, and POT collapsed down hard, losing that important 50-EMA. Apple Inc. (AAPL) showed a good recovery of our 50-EMA after losing it initially. Quite a few sectors are showing important leaders losing those 50's and this is a change of character no doubt. The Financials, after taking a significant hit the past couple of weeks, are showing some firming in some areas. We have these things going on and yet the S&P 500 is in the middle of its range for all intents and purposes. No break down. Nothing bad. Oscillators unwinding on those daily charts. By the time they get those index charts to approach the 50's they will be oversold. Doesn't mean they can't stay that way but that's reality.

On the bullish side of things it's quite simple really. Awful action in many leading stocks. Banks stink yet the bears can not find the guts to bring this market to its knees. To press on the gas and get those 50-day exponential moving averages to be barely visible in the rear view mirror. The bulls are finding a way through massive rotation to get this market to hang in there. I don't necessarily understand it. In many ways it makes little sense. Rarely, if ever, do you see some of the negative's in place and yet see a market hold up above critical support levels. Unheard of really. They're rotating in to the small- and mid caps quite a bit as those sectors are working big time. The Nasdaq is also holding up well and strong earnings from Research In Motion (RIMM) and Oracle Corp. (ORCL) yesterday only helped the bullish cause. Lastly, bad news isn't getting taken as a death knell. While it's true good news isn't breaking things out, bad news isn't breaking things down either.

The S&P 500 has a gap top at 1109 from Thursday's action. A solid gap that won't be very easy to get back through. So while 1120 is the true breakout (1119 previous top), the bulls have to focus their attention on being able to get back through that gap. A gap down so close to the breakout area isn't wonderful news if you're a bull. This market has shown strange resiliency and thus may have no problem making that move but the truth is, it should be a real headache and one would think the markets going to need a real huge dose of currently unknown good news to make that gap become a thing of the past not to worry about. Gaps are real headaches, especially when they take place near big breakout or breakdown levels so please just don't dismiss it as irrelevant. It's very relevant and could become a major problem. 1109 is the top of that gap as I mentioned thus we'll need a good close over 1109 to sat goodbye to it.

The PowerShares DB US Dollar Index Bullish (UUP) ETF put in a Doji today at Resistance thus we could be setup here for some type of bounce into year end as seasonality tends to be positive through the holidays. We will be watching the UUP to see if this pullback serves to set a right shoulder in our pattern which if so would hold some potential to provide the market with some type of corrective move during the first quarter of 2010.

Bottom line folks is, we remain in consolidation between 1085-1120 on the S&P 500 and are parked in the middle of our recent range. Our bias remains for an upside resolution in time but if we are wrong and our 50-EMA's were to give way on the major indices we will adapt to what we see. We continue to avoid the short side in general as long as the market continues to hold our Rising 50-EMA's on the major Indices. You need to respect the message of this market which is one that suggests that the consolidation could continue longer than we'd like to think possible. Let's pray for resolution, one way or the other. It would be great just to have something in place that's truly playable. Until then, easy does it of course.

Sentiment:
There are sentiment issues to deal with as the Investors Intelligence Survey (IIS) is showing more and more bulls out there with not too many new bears. The levels are not at extremes yet although it's not far away. This suggests that if we do get one more move higher, it would be the last one for quite some time as the bullishness would reach extremes that stop bull markets cold in their tracks. Watching this closely for more clues over the next few weeks.

Sector Watch:
The market continues to rotate from group to group. When some areas get extended they take a breather while other areas see rotational flow. Late week the Brokers/Financials started to see some rotation with the Regional Banking ETF up about 3% on Friday (see our 6th chart below). The Aerospace Sector continues to hold up well on balance. The Small/Mid Caps are showing some leadership qualities. While the Metals and Oil have been under pressure given the recent ascent in the US Dollar, the Dollar ETF, the UUP as mentioned above printed a doji on Friday suggestive that the Dollar is likely to take a breather soon and that tends to be a positive for equities.

The Week Ahead:
Same old same old folks. The usual does of economic news will hit and I'll be watching the usual 1085/1115-1119 levels on the S&P 500 for some guidance as to whether we finally break out or break down. It's hard to understand or predict how the market will respond to news as it gives head fakes both ways. Simple solution is to watch the critical 1085/1115-1119 levels.

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 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.


© 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