Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Canadian Cannabis Stocks CRASH as Canopy Growth Hits a Dead End - 14th Dec 19
Retail Sector Isn’t Dead, and These 6% Dividend Paying Stocks Prove It - 14th Dec 19
Top 5 Ways to Add Value to Your Home - 14th Dec 19
Beware Gold Stocks Downside - 13th Dec 19
Fed Says No Interest Rate Hikes In 2020. What About Gold? - 13th Dec 19
The ABC’s of Fiat Money - 13th Dec 19
Why Jo Swinson and the Lib Dems LOST Seats General Election 2019 - Sheffiled Hallam Result - 13th Dec 19
UK General Election 2019 BBC Exit Poll Forecast Accuracy Analysis - 12th Dec 19
Technical Analysis Update: Tadawul All Share Index (TASI) - Saudi Arabia ETF (KSA) - 12th Dec 19
Silver Miners Pinpoint the Precious Metals’ Outlook - 12th Dec 19
How Google Has Become the Worlds Biggest Travel Company - 12th Dec 19
UK Election Seats Forecasts - Tories 326, Labour 241, SNP 40, Lib Dems 17 - 12th Dec 19
UK General Election 2019 Final Seats Per Party Forecast - 12th Dec 19
What UK CPI, RPI INFLATION Forecasts for General Election Result 2019 - 11th Dec 19
Gold ETF Holdings Surge… But Do They Actually Hold Gold? - 11th Dec 19
Gold, Silver Reversals, Lower Prices and Our Precious Profits - 11th Dec 19
Opinion Pollsters, YouGov MRP General Election 2019 Result Seats Forecast - 11th Dec 19
UK General Election Tory and Labour Marginal Seats Analysis, Implied Forecast 2019 - 11th Dec 19
UK General Election 2019 - Tory Seats Forecast Based on GDP Growth - 11th Dec 19
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19

Market Oracle FREE Newsletter

UK General Election Forecast 2019

Stock Market Selling Accelerates...

Stock-Markets / Stock Markets 2011 Mar 17, 2011 - 04:14 AM GMT

By: Jack_Steiman

Stock-Markets

What a day we had today. Down in the morning before rallying back with the Nasdaq, actually going green for a brief moment before the European Union's energy chief made a comment about the Japan nuclear situation, which sent the market exploding downward. The Dow went from -40 to -200 in moments. Eventually, it almost went to -300 before rallying back to -130. It slipped again late finishing down 242 points. Down 50 plus on the Nasdaq and 25 plus on the S&P 500. Very nasty action with wild swings as the VIX has spiked, and thus, large swings were taking place all day long, although most of the swings are clearly lower. Larger swings do create more emotion, so it's best to keep things light on both sides as you'll get head faked time after time. Just better to keep things light to mostly, if not all, cash.


Once we gapped down we saw some flight to safety as the put-call on the index side was flashing levels at slightly above 3.0. Extremes for sure as the masses are fearful, and looking for protection in case the market crashes out. This is good news for the bull's bigger picture as it shows a high level of bearishness starting to come in. That's what it'll take in order for the market to find a bottom down the road. We did see some nice moves up once these extreme levels were hit early on, but the bad news out of Japan won the day. Just too much fear for now and that's why we saw selling late as few are anxious to hold overnight. With the poor close we are getting oversold on the short-term charts. We could see a bounce at any time due to these oversold conditions, but that does not mean the selling has finished. Recognize the need to not get caught up in a rally that takes place from oversold 60-minute charts. If you want to chase that it's your call, of course, but it's not the safest, nor the best, way to play the stock market. Let things work themselves out for a while. Patience is best here.

I don't think anyone out there would argue with this one basic fact. If you want the best stock in the world, just put in the Apple Inc. (AAPL). It's number one in everyone's heart. It seemed to me that the best way to create fear is to take the number one stock on the planet and break it down below the 50-day exponential moving average. Today was that day as it soared below its 50's on its way to being down 15$. It's biggest losing day in quite some time. Losing its 50's creates a lot of fear. Fear equals lower prices which equals a bottom. Without fear we can't get the selling needed to build back the wall of worry. The deeper this baby falls the better off the market will be for it. It will go lower still, but with bounces, of course, along the way. Apple has not seen its ultimate bottom on this pullback in the market. Good to see Apple crack today. It will go a long way to helping the market find a bottom a ways out from here.

When we go back and study the daily and weekly charts hind sight makes it easy, but let's study it anyway. If you noticed, the daily charts stayed overbought for a very long time with RSI readings getting well above 70. We all kept wondering what it would take for this market to start a long awaited pullback to unwind those lofty readings. Day after day the market would grind higher. It seemed as if it would never stop. Then we looked at the weekly charts on the major indexes. That ultimately told the story. They were working their way towards overbought, but their RSI readings hadn't hit 70 yet. When that magical moment did occur, it took but a very short period of time before the whole market gave it up. It took the daily and weekly charts to print a 70 RSI before this market gave it up. Very often it only takes 70 RSI on the daily charts before things rock lower, but in this intense bull market we needed confirmation from the weekly charts before we saw the market top out. Interesting, to be sure.

It now appears that the daily charts will need to print sub-30 RSI's before they are ready to make their bottoms. How great an opportunity that will be in time if we're all patient enough. Stochastic's will also likely have to print sub-10 readings if not sub-5. The lower the better is how I see it. MACD's will have to sink further below 0. But they're already somewhat below 0 with more work to be done. Fear is ramping now with more needed, but make no mistake about it, the oscillators are getting it done. When we bottom it probably won't be an immediate rush up. Rather slow at first, then it'll accelerate. But again, that's not upon us yet, so let's not worry too much about it. I'd rather spend my time trying hard to find the bottom of this market as close as humanly possible. Today's low at 1249 is support, as is 1225, and then 1200. Step-by-step we'll go lower.

Here's the hard part. When it's time to buy it will feel ugly, and you'll say, no way am I buying here. I can fully understand that. It won't be easy to buy the kind of weakness we've been seeing and what's still to come. You don't have to participate if it feels too difficult. Do what feels right, but when I feel that it's time, even if I am a bit early, I will put out plays for sure. The best plays are the ones you buy close to their lows rather than chasing much higher over time simply because you suddenly get the nerves to move in. We're not at that time yet. Relax. Let's watch how things unfold over the coming days and weeks.

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!

© 2011 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.


© 2005-2019 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