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
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
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

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

S&P 500 Approaching 1040 Neckline...IWM Loses Yearly Trend Line.....

Stock-Markets / Stock Markets 2010 Jun 08, 2010 - 02:58 AM GMT

By: Jack_Steiman

Stock-Markets

A lot of bad stuff took place technically for the market today. The Nasdaq finally lost its 200-day exponential moving average currently at 2224 while the iShares Russell 2000 Index (IWM) or the ETF for the small caps, the very best performer this year, lost its 200-day exponential moving average. on to of that, the IWM also lost its yearly trend line of support and you'll see that tonight in one of the available charts for your viewing.


Leading sectors losing trend lines and losing 200-day exponential moving averages is not good news for the bulls. Not by a long shot and thus needs to be respected for what it is. It's very ominous for the bulls that the mid-caps also lost the trend line and the 200-day exponential moving average. No matter where you turn you can see bad news technically and no matter how bullish many want to be, you have to respect what we're seeing in terms of breakdowns out of massive support zones. As I like to say, it is what it is, and you better take note of the price action and how no one seems to be stepping up to support this market. Let's take this one step further.

The S&P 500 is now only two points away from having the 20-day cross the 200-day exponential moving average, and that would not be good news for anyone who thinks we're about to blast higher. This would put the lowest critical moving average below the highest. Never good news for those who are bullish only. The breaks below trend lines and those critical 200-day exponential moving averages tells us to be aware of further selling. We're oversold and should bounce soon as the 60-minute charts are suggesting, but the resistance above is nasty and upside thus limited. That 1040 neckline is going to get a workout soon enough.

We were down massively last night as the overseas markets opened with huge gaps down. The market found a way to recover as near-term oversold conditions kicked in. We went from being down 130 points on the Dow last night to up roughly 30 at the open. After spending some time between flat and up 1/2% or so, the market finally gave way as the day wore on. The last hour saw selling accelerate allowing the markets to finish just off the lows for the day. Nasty action with all the critical sectors now down below their 200-day exponential moving averages. Bad action for this day which was confirmed by another atrocious advance/decline line. Never good to see the majority of stocks selling off to confirm price if you're looking to play spin doctor with them down day that just took place. Not much spinning going on here by the bulls.

There is a long-term head-and-shoulders pattern in place on the S&P 500. It has taken many months to set-up, and if it plays out completely, the market is in for some very nasty pain. SPDR Barclays Cap Interm Term Credit Bnd (ITR) measures to 860 S&P 500. However, there is some hope for the bulls in that by far the head-and-shoulders pattern is the most unreliable pattern in the world of technical set ups. It plays out a bit over 50% of the time while the more bullish inverse head-and-shoulders pattern plays out about 80% of the time. Why?

Because upside is the dominant side of the stock market as the market almost always go higher. It's just staying out of the bear markets that'll make your market experience a really good one. Bear markets are shorter in duration but far more nasty, so even if markets go down in price over a multi-year period, the market will still have had much more upside periods than down ones. This particular head-and-shoulders is really nasty looking and thus the fight is on right here. A close below the double-bottom at 1040 is where the pattern begins to get scary for the bulls.

The low in February at 1044. The most recent low at 1040 intraday. We are making new closing lows right now in the pattern and this too is ominous. Bottom line is the market is at a cross roads here. The bulls need to hold the fort at 1040 in the worst of ways, while the bears look to take the bulls to their knees with a strong break down below this critical support level at 1040.

The iShares S&P MidCap 400 Index (IJH), or small cap representative, closed at 72.19. Its 200-day exponential moving average is at 72.96. The LWM closed at 61.92 with its 200-day exponential moving average currently at 63.26. The Nasdaq closed at 2173. Its 200-day exponential moving average is at 2224. Take a look at those numbers folks. The three leaders in this stock market, the small-caps, mid-caps and the Nasdaq need to get back above their 200's and fast. If they don't and continue to fade the market will be lost to the bulls because then the 200-day exponential moving average will be too tough to get back through. The bulls at the end of the line here. Act now or lose the market for a while longer than they'd like to think possible. These are extremely interesting times and a critical time for the bulls if they hope to keep the bull market off the March lows alive.

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 21-Day Trial to SwingTradeOnline.com!

© 2010 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