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 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
GOLD BULL RUN TREND ANALYSIS - 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
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19
US Corporate Debt Is at Risk of a Flash Crash - 10th Aug 19
EURODOLLAR futures above 2016 highs: FED to cut over 100 bps quickly - 10th Aug 19
Market’s flight-to-safety: Should You Buy Stocks Now? - 10th Aug 19
The Cold, Hard Math Tells Netflix Stock Could Crash 70% - 10th Aug 19
Our Custom Index Charts Suggest Stock Markets Are In For A Wild Ride - 9th Aug 19
Bitcoin Price Triggers Ahead - 9th Aug 19
Walmart Is Coming for Amazon - 9th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Stock Market Trading Back and Forth, Unwinding Nasty Divergences

Stock-Markets / Stock Index Trading Oct 01, 2009 - 02:04 AM GMT

By: Jack_Steiman

Stock-Markets

Best Financial Markets Analysis ArticleThat's all we're doing while trying to unwind those daily charts along with those nasty negative divergences. We go up. We go down. We go back up and then back down all in the same day. Tremendous whipsaw in wide and loose triangles as the bulls and bears fight it out between 1045/1080.


In a given moment the bulls look like the winners and in the next breath the bears look like victors. Back and forth and in the end, no one is really emerging out on top. Maybe it'll take the big jobs report on Friday to finally get a winner in this high stakes game. Maybe it'll happen tomorrow but it looks as if some critical economic report may be the culprit as to what level goes first.

A real bad report Friday and I think we're in deep trouble. A real good one and we could blast up. It's unfortunate to be in a market and try to make money when it's so fragile. When one report can make such a huge difference and why we're playing so tepidly. I have very little confidence in anything here. Sure, we are getting some unwinding on those daily charts but that doesn't mean they can't go down much further thus allowing 1045 to break first.

To be precise, the number should now be 1047 as the 20-day exponential moving average is moving up slightly each day towards price. These are very dangerous times to be playing with any aggression.

The Dow moved up and down today almost 400 points. Things are getting violent my friends. Both sides are nervous. The range is only 3.5% wide. Not a whole lot of leeway. One event can change things dramatically. So anxious bulls and bears are in and out and in and out and doing it over and over again.

No one has confidence. One thing can be said with certainty. Which ever way this breaks, expect a very powerful move behind it. If we lose 1047, the S&P 500 could see the 50-day exponential fast, 3.5% lower. No fun. If we take out 1080, we could see 4% higher very rapidly. Bears will hate. Understand what's at play here and adjust your playing accordingly.

We started out with a move higher today when we saw some decent, although unspectacular, economic reports pre market. A good GDP with a fair ADP jobs report, which is the precursor to the big jobs report on Friday. It is supposed to give us a good idea about what to expect.

We moved up towards the bottom of that S&P 500 gap when we suddenly saw some wicked selling programs hit, taking the market down very hard and very fast. A nearly 200 point drop only to be followed by an amazing hammer back up of well over 100 points. With an hour to go, we saw more wicked selling followed by some buying back off those lows. An incredible day that saw nothing actually take place of any consequence because neither side made any real strides towards getting their number cleared. We ended up closer to the bearish resolution but that means very little in such a narrow trading range.

Dollar was weak yet again today and this is definitely on the side of the bulls. The RSI on the UUP chart got back to 50 where it seems to turn down. The UUP chart just can't clear that hurdle and thus when it closed near 50 yesterday it gapped down this morning, pushing the RSI on the daily chart back decently below 50, or in other words, keeping the UUP in a very bearish trend, which is why it's hard to get too bearish on the market overall.

Scary to watch how the dollar is just eroding away.

Every move up gets smashed back down with force. Every time it looks as if the dollar will have its day, it doesn't. If the UUP can close over 23.25 it will be back in an up trend and that would be very bearish for stocks. That's not happening at the moment unless some surprising news comes out of left field.

Bull markets, when defined, are said to be so when they hold the 20-day exponential moving average on pullbacks. We have now had two attempts on that level on the S&P 500 and Nasdaq, and one try on the Dow, the weakest index in the stock market. Tails off those 20's have been the name of the game thus you just can't get too bearish quite yet. These 20's are just the first decently important support levels. It gets far more critical below them, such as the 50-day exponential moving averages, but we can't get through the 20's right now so we need to focus on those 50's for now.

If we lose the 50's the game is over for the bulls. Again, not to think about for now. You could say that the 20's are being used to keep things from getting too bad in terms of price depreciation while allowing the oscillators to unwind. It's working for now. Again, 1125 can't be ruled out. If 1080 goes, we could melt up short term. At the same time, the daily charts look nasty thus you can't count out 1047 going away first.

I'm not trying to be cute here. This is extremely tough in these ranges. Cases can be made for both sides. So for now the bull remains in tact. Do not get aggressively long. I still wouldn't short until we can lose the 20's and fail on a back test to get through.

Peace
Jack Steiman

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.

Sign up for a Free 30-Day Trial to SwingTradeOnline.com!

© 2009 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.

Jack Steiman Archive

© 2005-2019 http://www.MarketOracle.co.uk - 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