Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gaining Insight Into Stock Market Movements

Stock-Markets / Stock Index Trading Feb 03, 2010 - 01:33 AM GMT

By: Jack_Steiman

Stock-Markets

All you can do is learn. We had a very intense move lower on the indexes across the board led by the technology stocks. In good markets the technology stocks lead up and in bad markets they tend to lead down as the appetite for beta is always there when things are trending one way or the other. Off the top there was no question that beta led down although we are not seeing beta lead up on this particular move which is somewhat interesting.


However, it started to play catch up big late in today's session. When markets correct they often do so in a fashion that leads many to believe the end of the world is here. Sharp quick moves lower that totally scare folks thus getting sentiment problems to reverse. We had a very bad sentiment issue thrust upon this market three weeks ago. Two weeks and 7% down in the markets later this market looked awful. Since then we have bounced back up to resistance or the 20- and-50 day exponential moving averages on the S&P 500.

We closed just a few points below thus the job for the bulls here is to hang close for a while and then burst back through. We may need a little time due to the fact that we're very overbought on the 60-minute charts. I guess we could always gap over and stay there but after a strong run such as we had the past few days, it would best to cool off a bit before moving higher over those critical moving averages. That won't be an easy chore for sure as there was lots of volume at the time we lost those levels. Normally, when you have a strong volume burst after losing critical support, you're going to struggle a while before being able to blast back through. There are reasons for optimism here but there's also reasons for caution and I will discuss them in a moment.

Today was constructive for the bulls no doubt but they still have to contend with the 20's and 50's just above at 1109/1107 respectively on the S&P 500. You try to look for signs from leaders about whether the economy is truly recovering or not. The United Parcel Service (UPS) CEO says that the recession is over. Who am I to argue with a man who deals with a global operation? He said things are strengthening everywhere he looks no matter what point on the globe we point to. If this is true, if it is really true, then the market will move higher this year. Of course this is open to debate as many companies are not declaring such enthusiasm. On the other hand, more and more are reporting great earnings. Look at the real estate group today.

We have that chart tonight. it just burst on better than expected earnings from many within that sector today. Whirlpool (WHR), get your Whirlpool's folks. This stock just burst out on earnings today. These companies are saying things are getting better and better. No reason for them to get overly optimistic and then disappoint the street later on. They legitimately feel things are rocking up here. Then earning's season has been strong. If this trend continues for another quarter, the market will trend higher and higher.

If we look at the daily charts we can see that stochastics are still basically at or near oversold. RSI's no longer are but they are still further down the chart than anything else. 40 RSI's are far from too high. So on the daily front, the market is still capable of big upside. The 60-minute charts are now overbought with stochastics in the mid 90's and could use a pause. However, if we pull back some and the oscillators don't push down hard we are likely to shoot back up. The daily charts are fine. The good news with the 60-minute charts is that the oscillators did impulse or push up hard during this rally and that bodes well for the future. It tells us that any move lower in the market is likely to create positive divergences on those charts. No guarantee and we'll watch that as it unfolds. However, the prospects are good on any selling.

On the down side of things it would be best if the Nasdaq stocks weren't under performing so badly on this first rally off the heavy selling. Many big leaders are dead in the water for now. Stocks such as Amazon.com (AMZN), Apple (AAPL), and Google (GOOG). Qualcom (QCOM) can be thrown in as can many more. This is not good to see and does raise some type of red flag regarding this rally and also tells us why the Nasdaq has so lagged its brothers and sisters upward. These stocks need to get going or the market will not make the move over key resistance right above. If the market sells off some steam from those 60-minute charts it would be great if those stocks actually held their ground and then started to lead up.

I said I thought this would be a correction and not a bear market. I talked about needing to drive sentiment way back down in to the bears camp and how some selling would get that job done. it has and I will be shocked if it didn't run down even further when we get the news tomorrow morning based on what took place in the market last week. With the sentiment issue likely now out of the way, the odds are solid that we will begin to once again head back higher. Nothing is guaranteed and I will watch the next push lower for confirmation from the oscillators but things are looking better.

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.

Sign up for a Free 21-Day Trial to SwingTradeOnline.com!

© 2010 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.


© 2005-2022 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