The market was overbought on many of the index charts going in to the weekend. One would expect the market to pull back from overbought, especially when the overbought conditions were on both the short-term, sixty-minute charts and the daily charts. When that happens it's usually a short-term top and down we go. Not today. The market is refusing to fall with any force. The bulls are back and back in full force, and dare I say, full froth. Markets are all about emotion as we all know by now. It's not about truth or reality. It's about the flavor of the day, regardless of what may be happening in the real world. The flavor of every day seems to be BUY!!! No matter what, BUY!!!!!

Good news is good news. Bad news is good news. Really bad news is good news. It doesn't matter. It's all good for now. Goldman Sachs (GS) is under investigation for manipulating markets today. The result? Down a drop. Chart is still very decent. In normal times it would be the type of news that could really hurt a stock.

Now, there's basically nothing that can hurt anyone. Caterpillar Inc. (CAT) warned last week. It was down four dollars pre-market, and finished up over a dollar. Nothing can hurt anyone it seems. It's all about emotion. It is what it is. It's all about the fed. It's all about low rates and lots of stimulus from the global central bankers. That's all anything is about. The bulls love fed protection, so again, everything is good news. No end on the horizon on that level as far as I can tell. It'll end someday, but no sign whatsoever at this point. That can drive a bear nuts. I actually feel sorry for them. They have to feel so whipped. They get all the news they would need under normal circumstances, yet they still can't get any love. Hug a bear, if you see one. Send them your condolences. There's nothing more you can do for the poor souls. So today was yet another day of defying logic and anything else you can think of. The bulls win, but there will have to be some selling soon. I think!

The short-term, sixty-minute charts are flashing some small negative divergences. Will they matter? They should. They don't have to. It can be worked off laterally, but we shall see tomorrow. Those divergences are fairly immediate ones, thus, we should get some selling now, but again, in this market who knows. Sixty-minute divergences are not bearish bigger picture, but they can bring a small amount of pain in the immediate future. There's some support at the 2044 gap breakout, and again at 2020. Can we, dare I say, sell 1-2%? Oh no, not 1-2%! Well, maybe we can, and we should, but we shall see. Another gap up wouldn't shock me, but if we do, we'll get even more overbought and create and even bigger negative divergence. But that shouldn't stop the bulls from trying anyway.

Even though the bull/bear spread is only about 20-22%, it's as if it's 45% as the bulls are as frothy as they could ever hope to be. Tomorrow is important. In the real world we should be ready to sell a bit. If we go lateral and work off the divergence, we'll go higher still as the week moves along. 2080 is big resistance. You learn a lot about the future by watching how the markets pulls back its oscillators, along with price once negative divergences exist. The next day or two will tell us a great deal. For now, we play this market for what it is and what it is is bullish. The bears have to prove it's not. Simple as that.

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.