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FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Stock Market Flat...Still No Splat...

Stock-Markets / Stock Markets 2013 Dec 10, 2013 - 10:36 AM GMT

By: Jack_Steiman

Stock-Markets

Poor bears. Even at the final bell they had to watch the Dow go from -5 to plus 6. Meaningless, of course, but it seems like a slap in their face as the market just won't give the bears even a sliver of a good vibe. Each sector was up a drop, refusing to go red seemingly in spite of the bears. This is why we have the sentiment problem we're dealing with now for a few weeks. The bears just can't gain any traction, and, of course, the moment the market sells even just a little bit the sentiment seems to be a rousing here we go. It hasn't happened with the bears growing increasingly frustrated. I can't even imagine how bad it has been for these bears the past many months as overbought has stayed that way while sentiment is flashing an outright sell signal.


So many have front run these conditions and felt the pain of playing emotionally. Today was no different. We tried to sell a few times today, yet each time the selling stopped when the market started to go red. It's as if red is against the law. The S&P 500 was still trading below 1813, but we're hovering not far below, and the bears are not getting it done in terms of removing price far enough away from this key level. They better do so soon, or this market will break above 1813 on a closing basis allowing for yet another leg up against all the odds. In the end, the market hung tough in the face of strong odds. Until the bears can kill this with a big gap down, hang in there with some small exposure.

The real problem for the bears longer-term is the economy, and the Fed in tandem here. The ISM Manufacturing Report caught the masses off guard as it blasted higher by two points above expectation. GDP was better than expectations. The economists caught off guard this time. Add in stronger jobs than anticipated, along with decreasing jobless claims reports, and the environment isn't exactly wonderful for the bears long-term. Now, add in Yellen, who is very dovish, and what chance do the bears have bigger picture other than the inevitable selling from too many bulls. She will keep rates low and liquidity high for a very long time to come. That's the perfect formula for investor confidence, and thus, higher prices for the stock market. Never straight up, but higher overall. The bears already recognize this and that's part of why the market hasn't sold hard yet. The future isn't too bright for the bears for now, although, once again, I warn you we can get hit very hard at any time due to sentiment.

What the bears really need is a strong gap down that doesn't get recovered in the first hour showing retail is not able to come in and bring it back up. These massive gap downs come out of the blue. I'm not talking the S&P 500 gapping down 5-7 points. I'm talking a 1% gap down that slowly runs lower all day. Once that's accomplished they can step down harder and bring the market below the first key level or the 20-day exponential moving average. They aren't in the neighborhood yet, but all it takes is one surprise gap down. Keep the bullish bias. Feel good about the big picture. Be more than appropriately light for the short-term would be my best advice.

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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© 2013 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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