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How to Get Rich Investing in Stocks by Riding the Electron Wave

Stock Market Back To No Control........

Stock-Markets / Stock Markets 2011 Dec 29, 2011 - 01:31 AM GMT

By: Jack_Steiman

Stock-Markets

The market getting back up to the breakout area of 1267 on the S&P 500 looked so promising if you're a bull. We headed into the holiday weekend with breakouts that were the talk of the stock market world. The bulls were talking the talk as it seemed Europe was under control for the moment. The reports in the United States, currently, aren't at all bad. The reasons for a breakout seemed real. That is, until today when the bears, not so fast, stopped us cold when we tried to break things down. But now, we're stopping the bears as well. No one in control. Volume is light, thus, both sides need not apply too much pressure to hold the other side off from making the bigger move. Holiday time of year when volume is basically light.


It would take a huge volume surge to be able to break one way or the other convincingly. A move that could not be stopped. Apparently, the bulls just didn't have what it took today. So here we are in the land of nowhere, yet again, after today's down move. Not a move lower than necessarily kills the chances for the bulls to ultimately get things moving upward and out clearly for the moment anyway. Both sides are squaring off, and neither side can land just the right punch to get things going dynamically in their favor. How much longer this can go on is anyone's guess, but for the moment, stalemate is the way.

To begin with, this is abundantly clear here. The sectors in favor, and the sectors out of favor, are shining in our faces. The defensive end of the market is doing best. Utilities, high dividend, lower P/E Dow stocks. Some are neutral, such as transports and retail. Then there's the usual lousy sectors, such as financials, and especially anything related to commodities, as the world is fearful of deflation as things slow down globally. The overhang in Europe is especially troubling to the world of commodities as it suggests that demand should be slowing over time. That's never good for any sector. Recessions around the globe are putting a strain on all commodities. Gold and silver continue in their bear markets. Everything in that world, basically, is in a bear as well. Nowhere to run... nowhere to hide... in that sector of the stock market. The technology world is loaded up with bear market set-ups. Froth is unwanted for now.

Stock after stock with high P/E's is getting slaughtered without mercy. Amazon.com Inc. (AMZN) can't find a bid. In a deep bear for now. The list is quite long. Leaders are just not leading in that world. The Nasdaq, and small caps, the worlds where froth is rampant, are massively under-performing the Dow. It seems that's the bigger picture message in this longer-term, lateral move going on throughout the stock market world. If you need to play this haphazard market, just know where shorting is easiest, and what stocks continue to hold up and perform relatively well.

The grand lesson for everyone in markets such as these is to try and grasp how one can out perform a market over a longer period of time. To fully accept the fact that playing the stock market isn't always the best thing to do, and that there are times when not playing this game makes the most sense. Most folks don't have the ability to sit in front of their computers and do nothing. The lure is always there to play. If you're sitting by the computer all day you're bound to play, even if you know it's not the right, or best, thing to be doing at that moment.

This is where most people get into the most trouble. They lose too much money in these times, and then feel bad about themselves for playing when they know they shouldn't have done so. The stock market is not about getting wealthy. It's about acquiring some dollars over time and to always out perform the S&P 500. Getting rich in markets such as these are nice fantasies, but nowhere near a reality. You need to learn to accept that the market isn't always playable. The more you can adapt to this simple truth of the market, the better your outcomes will be bigger picture. Something to ponder over.

So the bears tried to crush the market below 1225 S&P 500, and although they started to succeed, they ultimately failed in a very big way. The bulls tried quite a few times, now, to take out S&P 500 1267, or the old highs, and that, too, has proved to be too difficult. Both sides ever so close, but both sides failing. I believe that some time in January we will see the market make a major breakout, or breakdown, move that causes a directional play for several weeks, or even months, but we need to be open to both sides having a reasonable chance to accomplish their mission.

Anything that takes place now between S&P 500 1202 and S&P 500 1270 is just noise. Sad to say so, but it's true. That's nearly 6% worth of nothing. Accept what is, and what isn't, in this market for the moment, if you decide to play anything at all. Maybe keep your plays lower in size. Maybe keep your stops tighter. Take proactive steps to ensure you don't take any unnecessary, large hits to your portfolio.

And most importantly, be patient. Patience is the only thing that will pay off in the long run.

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.

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© 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.


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