Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Gap Down Filled But Action Still Weak Overall.....Poor A/D Line

Stock-Markets / Stock Markets 2010 Jun 02, 2010 - 02:10 AM GMT

By: Jack_Steiman

Stock-Markets

One thing the bears need to do to gain solid control of this market is to get a back-test gap failure off the 200-day exponential moving average which occurred today at the open. The only problem for the bears is the gap, instead of running lower, filled fairly quickly thus there is now still no open gap below that back test which if it did exist, would make the job of the bulls more than difficult in getting that 200-day back. A gap down failure off a back test can often be death for the bulls if they can't fill it immediately.


All that said, the bulls really don't have much to be happy about here as we saw another poor closing last hour. Yes, they filled the gap but horrific action for the day overall in the down trend clearly in place. Not many looked to own stocks as the fear of poor economic news from Asia and Europe rule the day. We closed just off the lows for the day on very poor internals, which confirmed the overall negative action. Nothing good for the bears here. The bears could use that gap that holds below the 200's but even though they failed on that front today, they let the bulls know that getting back through the 200-day EMA's on the S&P 500 and Dow will not be an easy chore.

Midday we spotted something that bothered us about being long anything in this market, even with the daily MACD's being pretty compressed down. We noticed that the advance decline line, with the market up near their highs, we're all negative, nearly 2/1 in fact. That's not what markets usually hold rallies from. This made us go to cash just in time. The market gave it up shortly thereafter and when all was said and done on that front, the decliners led by nearly 3/1 over advancers. Never good to see the majority of stocks acting so poorly below those critical 200-day exponential moving averages. The internals speak and they say the bulls should be more on edge than usual.

Watching the action of the Oil Services Holders (OIH), or the proxy for oil, tells us that oil and most commodity areas are in bear markets. That is undeniable. They are all incredibly compressed at oversold. Levels of oversold rarely, if ever, have seen yet not even the hint of a rally. Absolutely destroyed. The problem in the gulf is allowing those stocks, and that whole area, to act as the financial's did in the 2008 bear market. Not a bid no matter how compressed things are at oversold. An eerie bear market going on there. It says don't be a hero and try to catch that sector at a bottom. There's no way to know where that bottom is. it could easily be very far from here. Please respect the message being sent there.

The bigger trading range in place is the double bottom low at S&P 500 1044/1044 made in February and April. The top very clear at that nasty 200-day exponential moving average at 1101. The same level also contains a gap thus getting through for now is nearly impossible. 1040/1101 and the question now is who wins out. Who can hold and who gives way. If the market were to lose 1040 on a closing basis it would be very bad news going forward. A move in to the 900's would be likely in very short order. A close 1% above 1101 or roughly 1111 or so would be near-term more bullish, and give hope that things will turn around for the bears soon. Anything in between is really noise and often unplayable.

Bottom line is today's action wasn't anything for the bulls to celebrate even though they filled a nasty gap down from below the 200-day exponential moving average. A good save but overall poor action on poor internals say its not a good idea to be thinking about putting on too many new long plays for your trading portfolio or your longer-term portfolio if you have one. I wouldn't recommend you deploying a long-term portfolio right now. It could work but I'd need to see a lot more from the bulls to suggest this would be a good thing to do in the moment. Things aren't great here for the bulls and it would take some unexpected good news from overseas it seems to reverse the trend firmly in place. Play slowly please. Cash is a very good thing right now.

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