These are very, very interesting times folks. The market behaving poorly for the first time on an extended basis after nearly seven years. The bulls are so used to having things go their way day after day, week after week and year after year. That ended suddenly in 2015 when the markets were overall red, but barely so. Not enough of a push lower to get anyone thinking the end of the bull run is near. Most thought it was simply a year of basing after a long move higher that would lead to yet another leg up.

I didn't think so based on those long-term, monthly index charts, which were flashing a serious red flag warning. Massive negative divergences abounded on all of the key index charts, something that I thought was needed to play out over time. They are beginning to in terms of a downward thrust, but, again, they started their magic quietly in 2015. As soon as January began this year things turned very sour. No mercy throughout January. Day after day the struggle was on. The bulls being mercilessly hit. We hit extreme levels of oversold that have been getting more so.

I have been expecting a strong counter-trend bounce just to unwind things for a while, but that has been hard to come by. It's hard to get excited about today's move higher off the lows, since, in the end, the Dow was down nearly 250 points, while the S&P 500 was down 1%. Some indexes turned green, but the buying wasn't across all of the indexes, although I thought remaining in cash was best, thus, no shock if we go up and back test that lost seven-year trend line now at roughly 1935. That said, it wouldn't shock me if we don't, because we did close nearly half a percent below the old August low printed at 1867. A close above would have gotten me long at the end today, but the failure to blast back through kept me on the sidelines. I'm just not good enough to call every wiggle. So today did see a nice reversal from extreme levels of oversold, but there's no celebrating in bull land this evening because a close below 1867 is just that. Close may get the rally, but it'll have to do it without me. Just too much risk for my blood.

The banks continue to trade as if Fed Yellen is frightened out of her mind about what she's seeing in the economy both here and abroad. She's talking about possibly taking back, if necessary, the recent, quarter-percent rate hike. The market wants nothing to do with that becoming a reality. On top of that, the market took her on her word that we'd get an additional four raises this year alone. We may not get a single one. The banks want rate hikes, however, the action lately is telling us it's more and more likely things won't be going their way. Rate hikes again put on hold for some time to come. Even when they try to bounce the efforts are weak. Almost forced. Almost as if someone who shouldn't be involved is and then they sell back off. No sustainable upside and that makes a lot of sense considering the economic reports we're getting one after the other for many months now with the past few weeks tilting way down. If the banks aren't going to rock, it's hard to believe the rest of the market will since the banks tell us what the Fed is about to do. if the Fed sees trouble, the whole market will react to that message. So far not so good.

Look folks, we are very oversold, and will probably bounce hard very, very soon, but trusting anything here without classic action tells me to stay away and miss the bounce. Many of you will get annoyed, but come on, I can't be that good. I've kept you out of the carnage 100%. So if we miss a percent, or two higher, so be it. 1867 is first resistance. The big resistance is at 1930/1935, or the lost up trend line. Let's see what tomorrow brings. Only a close over 1935 with force turns the tide more bullish. That won't be an easy task for the bulls. Day to day in an overall, down-trending market that is looking to bounce from severely-compressed oscillators.

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.

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.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.