Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Silver Notches Best Month Since 1979 - 12th Aug 20
Silver Shorts Get Squeezed Hard… What’s Next? - 12th Aug 20
A Tale of Two Precious Metal Bulls - 12th Aug 20
Stock Market Melt-Up Continues While Precious Metals Warn of Risks - 12th Aug 20
How Does the Gold Fit the Corona World? - 12th Aug 20
3 (free) ways to ride next big wave in EURUSD, USDJPY, gold, silver and more - 12th Aug 20
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Stock Market Hits New 2009 High, Some Negative Divergence...

Stock-Markets / Stock Index Trading Oct 17, 2009 - 01:45 AM GMT

By: Jack_Steiman

Stock-Markets

Best Financial Markets Analysis ArticleWe finally made the move over the 1080 level on the SP 500. It took quite a long time with lots of close calls that teased the bulls and gave the bears reason to wipe their brows in relief. The gap was on huge volume back in October 2008 thus it really came as no surprise that we failed the first tests up there. With the bears never really able to sell things off, the bulls finally found a way to get the job done. At the same time we cleared 1080 on the Sp, the Dow made a run and cleared 10,000. It felt really good to anyone who has a bullish slant. The real question that's being asked is whether or not we can hold over Dow 10k and above Sp 1080. There are some signs that short term, it will be tough for the bulls here.


That does not mean that anything terrible is going to happen to this market. Not by any means. It does mean there's a real chance we see some struggle up here and here's why. If you study the daily charts you will see some very overbought stochastic's. The SP 500 and Dow now have Stochastics heavily Overbought at 95. In addition with our new high printed on most Indices we did not confirm the move per most Oscillators. See our first 3 Index charts below. It can grind a bit higher but that's all.

The Dow has four new highs in price with four consecutive lower Macd readings. This normally would bring a bout of some selling. Again, it doesn't mean anything horrific is on the horizon but it does mean the risk for long side plays has increased here. It tells you first and foremost to reign in your enthusiasm. Now, if we had the negative divergences but we had only a neutral stochastic, then it wouldn't be as much of a red flag very short term. However, when you combine the two, it does say to go real slow here. It's not a situation that says go short with gusto but if we have a labored move back up and the oscillators don't respond, we can short a little bit. The danger being an incredible number of very important earnings reports next week that will move the market around with great volatility. Bottom line here is that we have some very short term red flags that need to be respected by the bulls. Quadruple negative divergences and overbought stochastic's. Please respect this reality and adjust your thinking accordingly.

The real thorn in the side of the bears is unquestionably coming from the behavior of the dollar, which on its best day, can barely get a bid going. Commodity stocks pull back a bit but then find a bid all over again. So many are looking for that inevitable dollar reversal, it tells me we may not see it for quite some time. Always rallies but nothing very sustainable. The UUP would have to recover 23.25 to be in good shape again but for now, it's showing nothing but slow erosion day by day. It's a very slow moving vehicle thus to get above there from here would take something very special that's just not out there at this time. With the action in the dollar being what it is, the bulls can hold on to their hopes that this market, in time, can go higher still.

So next week we get week two of the big earnings season. We see MSFT, AAPL, MS, WFC, BNI, UNP to name a few of about 40-50 big reports. Everything from Financial's to Biotechs to Transports to Retail to Commodities. The market will move on these reports. Some will be great. Some will stink. The market will dance with volatility as these are reported day by day. Expect this to be the norm. We've had big winners and losers already and we're just starting. GE, BAC, AMD, IBM, AOS, JNJ, NOK, C, LSTR and GS were all losers. CSX, WDFC, ABT, LUFK, GOOG and HOG were all winners.

More big losers than winners thus far yet the market is holding up pretty well. That too has to be respected. The market seems more forgiving now. Even if something reports badly, it's not necessarily hitting the whole sector. For instance, LSTR in the trucking sector was hit hard on their report two days ago yet our trucking play, CHRW, moved higher anyway. This is a change of character. One more bullish than anything else. Bottom line is we have to recognize the added risk short term based on divergences and overbought on the daily charts but there is NOTHING suggesting anything terrible as all of our Uptrend Channels remain well in tact and are far from being threatened at this time.

Sentiment Analysis

There is nothing going on in the world of the put call ratio that suggests we're seeing too much complacency. Today was a bit low with some selling that took place but still nothing that says we're in trouble on that level. The bearishness amongst the AAII survey of investors is actually slightly increasing as the market churns. This is good news for the bulls. Few believe the market can ultimately continue higher. A good tonic for more frustrated bears longer term. The numbers can change quickly but they aren't showing any inclination to do so right now.

Sector Watch

Mixed bag this week on the Sector front. Some of the worst performing Sectors were those which hit the top of their Uptrend Channels during the week. INTC flamed out after reporting respectable numbers as the SOX hit the top of our Uptrend Channel mid week and turned down the balance of the week (see chart 4 below).

In addition, some late week poor earnings from some of the Financials put that Sector under pressure late week. See our 5th chart below which may be the single most important Sector to watch in the days ahead. Gold and Silver did not participate this week even though the Dollar was higher as they both took a breather after a strong recent run.

The Transports had a strong week with a favorable report from CSX lifting the Railroad Group. Oil broke out to a new 2009 high out of a 6 month base seen in our 6th chart below. Other areas of strength included the Aerospace, Food Retailers, and Chemicals.

The Week Ahead

It's all about those earnings I spoke about in this report. The market is thirsting for them. It wants to know the truth about the economy, or at least the truth given by the Ceo's. Are things appearing to bottom for good or is there enough doubt to knock this market down. Earnings, as I have mentioned, haven't been great but far from terrible. A few more disappointments than I thought we'd see. If this continues, this will likely add to the probability of some type of pullback that can last for a few weeks overall. If the numbers come in extremely well, then the pullback is likely to be muted. The scorecard thus far says there is likely to be some bad ones but we'll see. Nothing else is relevant. Keep a close eye on the Banks. Earnings or bust this week.

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