Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
The Central Bank Time Machine - 23rd Aug 19
Stock Market August Breakdown Prediction and Analysis - 23rd Aug 19
U.S. To “Drown The World” In Oil - 23rd Aug 19
Modern Monetary Theory Could Destroy America - 23rd Aug 19
Seven Key Words That Explain "Stupidly High" Bond Market Prices - 23rd Aug 19
Is the Fed Too Late Prevent A US Housing Bear Market? - 23rd Aug 19
Manchester Airport FREE Drop Off Area Service at JetParks 1 - Video - 23rd Aug 19
Gold Price Trend Validation - 22nd Aug 19
Economist Lays Out the Next Step to Wonderland for the Fed - 22nd Aug 19
GCSE Exam Results Day Shock! How to Get 9 A*'s Grade 9's in England and Maths - 22nd Aug 19
KEY WEEK FOR US MARKETS, GOLD, AND OIL - Audio Analysis - 22nd Aug 19
USD/JPY, USD/CHF, GBP/USD Currency Pairs to Watch Prior to FOMC Minutes and Jackson Hole - 22nd Aug 19
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

S&P 500 Back Testing...Retail Crushed....

Stock-Markets / Stock Markets 2016 May 12, 2016 - 12:32 PM GMT

By: Jack_Steiman

Stock-Markets The market can confuse the best of them. No one could have seen today coming after we broke out yesterday on the S&P 500 with its move above the 20-day exponential moving average at 2069. It had traded between the 20- and 50-day exponential moving averages for a few days, but then suddenly made the move up, although there didn't seem to be a good reason to do so. Since earnings are poor along with a plethora of other problems it made little sense to make the move, although the trend is clearly higher. That said, the move was made and it was made with some force as we closed at 2084, nearly one percent above.

Today should have been a follow-through day for the bulls as it would put some distance away from 2069. Not to be as the market gapped down and ran lower slowly but surely as the day moved along. A head fake breakout? Possibly, but we won't know for sure for at least another full trading day. We'll see who takes control from here. The back and forth is driving traders nuts as we're now seeing large amounts of dollars being pulled out by retail folks from their funds.

Week after week we're seeing this, and it's because the market goes nowhere with one head fake after another. Folks surrender after a while. They don't feel secure in their holdings. Really, who can blame them in this whipsaw nonsense held up by low rates and nothing else. With so many negatives out there the market is having a hard time breaking out above the old high on the S&P 500 at 2134. It can still occur, but the struggle continues. A battle now as at least the bears are fighting some. Not much but some. They surely did good work today with keeping things more uncertain. So with the close near 2069 things are far more confusing, but still overall bullish. The onus is, and will be, on the bears to change in a big way the overall prevailing trend, which is up. A struggle but up. Up on the Dow and S&P 500 that is. The Nasdaq continues to lag. A strange market for sure with today's action making things even more unclear for everyone. Welcome to the fed market. Not much fun is it!

I've talked about it, but it's very important to go over this again so you recognize the type of market we're in the risks. A healthy, full-fledged bull market is led by froth. Nothing but pure froth. Junk if you will. Risk is all anyone wants. They want to buy stocks that are selling nowhere near what they should be. Overvalued garbage stocks is what they want, because they know the emotion, the lure of froth is just too tempting and big money knows retail will chase, chase, and chase some more. When super-high P/E, or, better yet, no P/E stocks are rocking, we know all is right in Disneyland. The problem now is we're seeing more truth come out. Big money wants low P/E, low beta, and higher dividend safety stocks to lead the way for them. The retail buyer isn't getting the support they usually get from the big money folks who will buy junk when things are rocking. They are getting frustrated, and, thus, over time they stop buying junk and simply walk away.

Big money then continues to buy only safety plays. An unhealthy bull. We see it as the Nasdaq is down 5% for the year with the S&P 500 up a drop over 1%. Too large a bifurcated market to call it truly healthy. Maybe it's just rotating for a while and we'll see the Nasdaq lead again, but today, and the past many months, shows why the market goes nowhere. No real thirst for risk. So keep in mind where we are in this bull. Not what we truly want to see, thus, keep it lighter than normal. Nothing bearish yet, but red flags abound. We could still break out, but red flags are around for now. The fed market may win out in the end no matter where we are right now, but just make sure you don't get complacent. Some scratch in the game is fine, but nothing too aggressive makes the most sense to me. Do what feels right to you, of course.

The S&P 500 and Nasdaq saw a lot of carnage today in the retail sector after a warning from The Gap, Inc. (GPS) the other day. Amazing moves lower in the retail sector for stocks such a CVS Health Corporation (CVS), Dollar General Corporation (DG), Dollar Tree, Inc. (DLTR), Tractor Supply Company (TSCO), Macy's, Inc. (M), Nordstrom Inc. (JWN), Lululemon Athletica Inc. (LULU), Deckers Outdoor Corp. (DECK), Dick's Sporting Goods Inc. (DKS), Under Armour, Inc. (UA), Restoration Hardware Holdings, Inc. (RH), Williams-Sonoma Inc. (WSM) and Wal-Mart Stores Inc. (WMT) to name just a few. Amazing, the rotation that exists in this market to hold things up.

The carnage was huge, yet the selling wasn't all that intense, although we are testing the 20's and gap at 2069 and 2065 respectively on the S&P 500. This market is very hard to wrap my head around as it is trading in a fashion that makes little-to-no sense. It can't break down with all the bad news out there, yet it can't quite explode out either. Low rates are keeping the bulls in the game, and there's no way to know at this point in time if that game is coming to an end or whether it will keep driving the markets higher. Without low rates it is my belief that the S&P 500, at a minimum, would be trading many hundreds of points lower, thus, I think risk is very high. That said, there is still nothing bearish taking place, but like I said earlier, don't get complacent.



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.

Sign up for a Free 15-Day Trial to!

© 2016

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.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

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

6 Critical Money Making Rules