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Froth Stocks in Mini Bear Market....Overall Market Still Meandering...

Stock-Markets / Stock Markets 2014 Mar 25, 2014 - 10:21 AM GMT

By: Jack_Steiman


There is really not much to add from what I spoke about on Friday. The bears once again seized on froth, but failed to seize on the entire market. The Nasdaq was down eighty-plus points intraday, but managed to recover some of those losses. The action on the Dow and S&P 500 was quite benign for now. There are two markets under way here. There's all that isn't froth, and those stocks are holding up quite well while froth gets hit day after day without mercy. There are some oversold bounces along the way, but the froth stocks are taking a real beating.

Most of them are in bear territory as defined by the market, which is a 20% move down off the highs. Some as much as 40%. It has been a very bad time for those chasing a dream, while those who are more patient are hopeful for what's to come once this correction ends. The key is whether the whole market will fall as one sooner than later. It would be healthier if it did, but that's still very unclear. The indexes keep playing with all types of moving averages. They go below and then back above, and then close at the close of trading.

No real breaks either way. Breaches, sure, but no real convincing with force break downs. It's confusing why the whole market doesn't dive down. But you never argue with what's taking place. You go with it, and for now there is some unwinding going on within those daily charts and that's a good thing for the bigger picture. The S&P 500 and Dow could use a lot more unwinding but the onus remains on the bears to make that happen. Maybe once those froth stocks are done correcting the rest of the market will join in on the fun. Unclear for now. The very difficult environment remains.

You look for hints when studying a market. You use those hints to decide when the time is truly right for something to occur you believe has to happen. I keep searching throughout all the oscillators, and then some, to discover if I can predict when and if things will get really nasty. There really isn't much in that direction. If you study the daily Nasdaq chart, the MACD is not too far from the zero line now. When you get to that level from way above you often stop selling there. It doesn't have to, and can keep selling for sure, but we haven't lost too much at all with that unwinding back to 0.

Again, it's only been the froth stocks. The weekly charts say much more selling should take place, but the weekly charts are not the in the moment charts, thus timing them is nearly impossible. We try to use the daily charts for that discovery. It's interesting that the Nasdaq, with its deeper unwinding, is actually starting to look a little better than the S&P 500 or Dow because those two sectors having sold enough, thus their MACD's don't look as good. Strange but true. Selling can make charts look more bullish.

So the market continues to meander. Flat for the year for the most part when you average things out. The market environment remains difficult at best. It'll be interesting to see if the S&P 500 and Dow play a bit of catch up, but the market remains the same meaning avoid froth and keeping things light overall.



Jack Steiman is author of ( ). Former columnist for, 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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© 2014

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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