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
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
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

ISM...ADP Jobs Blind Side Stock Market....

Stock-Markets / Stock Markets 2011 Jun 02, 2011 - 03:08 AM GMT

By: Jack_Steiman

Stock-Markets

Manufacturing and jobs. The market has been watching these economic indicators and noticing that they seem to be holding up through the efforts of QE 1 and QE 2 from fed Bernanke. It's not that they have been so good. It's just that they have held up fairly well over the past several months. Today the market got blind sided two times. First, the futures fell from flat to roughly 40 on the Dow when the ADP Jobs Report, the precursor to the big report on Friday, came out and showed a dramatic drop in new job creation. Not good at all. Then the market got slammed.


A shock as the ISM Manufacturing Report came out showing things have really hit the skids. Not good at all. A severe drop the market clearly was not ready for. This came thirty minutes in the trading session. The market fell hard on this news. It spent the rest of the day falling gradually with very little in terms of rally attempts by the bulls. They gave up, pretty much allowing a lot of support to just give way, without much of a fight. Surprising for sure. No fight with so many support levels close together.

When markets are stronger you don't get through this type of confluence of support. The bulls will win out every time. Not today. The bulls folded the tent and walked away, although they did hold that final line in the sand at 1315 on the S&P 500. This will be at least the third separate effort by the bears to take it down. However, it has tested it intraday many times more than that. Third time can often be the winner although strong bull markets can make the bears test it more than three times. As many as five or six times, but you have to be more guarded when you are testing for the third time in a very short period of time. Again, we held the key support level at 1315 today, but there was lots of technical damage done with the removal of so many support levels bunched together. If we lose 1315 in the near future, you can expect a strong swing lower. Levels to be discussed later on in this report.. If we go back in time and study the one sector that has led this market down, and has struggled to gain any momentum to the up side, it's the financial stocks which, of course, can't support themselves. Only the good deeds from fed Bernanke has kept that sector up to where it is, weak as it may be. If he pulled the plug on the cash flow to these banks they'd crash under their own weight. They could not survive without assistance.

Possibly a JPMorgan Chase & Co. (JPM) would survive, but I have my doubts about Wells Fargo & Company (WFC), and more than my doubts about Citigroup, Inc. (C) and Bank of America Corporation (BAC). The fallout would be devastating to the economy, thus, he continues to pump away at will. The bottom line for these stocks are they have no backbone. They survive thanks to the grace of a machine spitting out dollars. Not the best place to be putting your hard earned dollars. The Direxion Daily Financial Bull 3X Shares (FAS), or the 3x ETF for the banks, got annihilated today by nearly 10%. No mercy in this area of the market when things go south. The last place people are hiding their dollars are the financial stocks. Proceed with extreme caution in that part of the stock market world.

So what's a fed Governor to do? I'm glad I don't have his job, but if I did, I'd let the system fail and stop throwing good money after bad. With the economy clearly weakening why waste the new dollars any more. However, my gut says he will actually pick up the pace even further with regards to printing cash as he's worried things just aren't moving in the right direction. He's right, they're not. The more he prints the more the more likely things will get crushed somewhere down the road, as long as years down the road, but somewhere out there a price has to be paid for adding debt onto debt ceaselessly. It just doesn't stop. He's so concerned about nothing bad happening on his watch he just doesn't seem to be seeing the bigger picture. You can only try to inflate for so long. If it's just not happening he should let it go, but for the foreseeable future he won't be letting anything go. He'll try harder and harder to inflate. I feel for him, but I can only hope he does the right thing some day.

Let's look at the technical damage caused by today's nasty move down across all the major index charts. Today's candlesticks engulfed all of yesterday's gains and then some. In fact, they engulfed a few days worth of action. Here's the key beyond the engulfing sticks. The Nasdaq and S&P 500 had four areas of key support just underneath price going into today's action. The Nasdaq had the 20-day exponential moving average at 2800. It had the 50-day exponential moving average at 2790. It had two gaps. One at 2796 and one at 2782. No way one would think we could remove all of that in one single trading day. Guess again. We did and did so in a very large way. All taken out with a close at 2769. Incredible action with the Nasdaq down 66 points. The S&P 500 did the same, losing two gaps and both the 20- and 50-day exponential moving averages. It closed right on 1315 (1314.55). 1315 held again, but I guarantee you, the bulls aren't doing a happy dance tonight just because we're still holding 1315 on the S&P 500. If we lose 1315, the next support level is the right shoulder low at 1294. Below that is a small gap near 1270, and then the March lows at 1249.

It's do or die time here. We're a bit oversold but don't expect much upside here. Below 1315 will force things to get ugly fast.

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 21-Day Trial to SwingTradeOnline.com!

© 2011 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