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
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
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

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Finally Some Selling That Sticks........

Stock-Markets / Stock Markets 2010 Apr 01, 2010 - 02:58 AM GMT

By: Jack_Steiman

Stock-Markets

Not a whole lot. Nothing to get excited about by any means. In fact, it looked like the early morning selling would be wasted once again. We gapped down on a poor ADP Report (ADP National Employment Report), which is a prelude to the big Friday Job’s Report. It gives us all a sliver of insight as to what we can expect when the big number gets released on early Friday morning. The market was expecting a move higher in the jobs number but instead we got a loss of 20,000 jobs. The market surely didn't love the number but it didn't exactly fall apart.


Dow futures went from -10 to -39, which doesn't say much for the power behind the bears these days but lower is lower and we did gap down. We grinded slowly lower and then took another step down with the Dow down nearly 70 points. That was enough said the buyers and back up off the lows we went and pretty rapidly at that. The Nasdaq actually going slightly green a few times. However, in the last hour we saw the selling pick up again with the Dow down 70 once again before a little buying kicked in allowing for a 50-point loss with the Nasdaq down 12 and the S&P 500 down 3.

I know, nothing to get excited about but I'll take any selling that kicks down the oscillators. In this bull you can't get greedy with too much selling. You take what you can get and if it unwinds even a little bit of those overbought conditions you celebrate. Today we got a small dose of unwinding. Not much but better than nothing.

This is a game of emotion. Pure and simple. No one will argue that point. Even in the best markets you grapple with what to do. Can you trust the gains, etc. Should I sell or will it keep going up? Do I even believe in the market enough to get involved at all? Do I sell the moment some selling kicks in? On and on. The answer is simple really if you take a deep breath and look at things logically. If a bull market is in play the only time you really need to worry longer-term is when sentiment gets too bullish.

That normally comes when the bull/bear spread reaches 35% plus. It took the level of 37.5% to get our most recent pullback of 9%. So where are we now? At 29.3% more bulls than bears. Getting up there but not at the levels where you take off your long plays or stop going long at all. It requires close monitoring for sure and if and when we get there, you go cash.

Every percentage point above 30% means you should be playing less and less aggressively to the long side. It does not mean you start shorting. Not by any stretch of the imagination. That comes only when the proper reversal stick is printed. However, each percentage point over 30% means you should start thinking about cutting back on your exposure. Please keep that in mind as things evolve. This is why a good bout of selling would be perfect for this market before things get out of hand.

The market is closed on Friday, yet it will announce on CNBC, or any channel that covers the stock market, those job numbers the whole world is waiting to hear. Has the economy finally turned it around? Have we begun to see corporate America finally start to hire again because earnings are actually increasing through true profits and not just cost cutting? The job number is supposed to show a large increase in jobs created. Near 200,000 many think.

If the number comes in poorly we could see a real pullback ensue. Not just a hundred Dow points but possibly quite a bit more. If the number comes in good, will the market go down anyway because it's baked in to the pie? After all we have run up quite a bit already. It is unclear and there is real risk in to holding too much in to the report. All that said you have to give the benefit of the doubt to the trend in place and we know that a bull market is clearly what we're experiencing. You need to have at least some exposure for sure.

You must all individually decide what you want to hold. We've had a great run so maybe on your own, even if we don't take plays off, you can. We will hold exposure for sure. How much we're not sure yet. We'll decide that tomorrow as there's no market on Friday thus after the numbers come out Friday morning, we have to wait until Monday to respond to them.

S&P 500 1151 remains massive support on any selling to come. Some breach is always possible but for now we use that level as our guide, especially since just a few points higher lives strong support or the 20-day EMA.

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