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
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

Stock Market Rejection At The 20's/50's.....

Stock-Markets / Stock Markets 2010 May 14, 2010 - 02:55 AM GMT

By: Jack_Steiman


Are we having fun yet?

It sure did feel good for the bulls as we rallied hard off the most recent lows that scared everyone who has ever been associated with the stock market. We went from the end of the world to what a wonderful rally we have going on here.

However, when a market rallies far off the lows and then hits the 20- and 50-day- and 50-day exponential moving averages it usually needs to pause for a while with a pullback whose magnitude will tell us a lot about this market.

How deep will this go? Will it go back to the 1122 gap? Will it hold at the 1150 gap?

Lots of discovery coming up shortly. The range is being defined and it's where it makes the most sense. It has set up shop at the 200-day exponential moving on the bottom at 1102 and rising very slightly each day. The top is at the 20- and 50-day exponential moving averages with the highest number to clear being the 20's at 1172. A 70-point range for the moment or roughly a drop over 6%. A pretty wide and loose range for sure.

The moves up off the lows at 1045 and drop off the top at 1220 have had very little in terms of basing thus this pattern is extremely wide and loose and thus prone to strong volatility within the range. Can cause lots of whipsaw for quite some time and drive traders crazy if you play too much. I warn you all about playing too much for now. You are going to suffer with many emotional exit decisions which will likely lead to unnecessary losses. Less is best for now.

The Euro continues to drop while the dollar continues to rise. With the CurrencyShares Euro Trust (FXE) or the euro breaking down today it does raise some eyebrows. However, it is getting extremely oversold with the daily RSI at 25 now and stochastic's at 10. You get the feeling that just when things will look their worst it will reverse and the stock market will start to hang in there as it fights back.
When the euro rises back the market should as well. The dollar is very close to making its inverse head and shoulders measurement and this goes along with the massively oversold conditions setting up on the euro or the FXE. Watch the PowerShares DB US Dollar Index Bullish (UUP) (dollar) and the FXE closely over the next several sessions. Watch for the reversal on the FXE from this breakdown.

Now the good news for the bulls. Bullishness abates quickly in lateral markets. It won't take long before the bull bear spread is down in the teens or lower, depending on how long this market continues to trade in this moving average range. The hands will get thrown up and sighs will be heard throughout the trading land. The bears will feel that they've taken over and they will ramp up the pessimism as the bulls quit and walk away. This would be the perfect tonic the bulls are looking for thus it's best that this handle lasts a long time. Not just weeks but possible months. The longer the better. Simple as that.

I know it doesn't seem like a lot of fun folks when markets behave such as they are now. You have to understand the energy this market used up from February to April in that parabolic move higher. It is wiped out for now and just needs time to gather energy back so it can try to move higher again as long as the news allows it to economically. It will still need a strong earnings outlook to continue higher but if that is in this economies future then the market will simply need time to gather its forces to drive higher. It may need more bearish action in terms of pessimism and it probably also needs lower oscillators. A deeper unwinding in the internals if you will. Time folks. Time!



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 21-Day Trial to!

© 2010

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