Stock Market Praying For Resolution....
Stock-Markets / Stock Markets 2012 Jan 10, 2012 - 07:33 AM GMTBy: Jack_Steiman
Aren't we all! If this continues for too much longer we may all lose our collective minds. It's almost too painful to wake up, and deal with this every single day. If this was a short-term pattern for just a few months I could deal with it, but this is going on just far too long, and it needs to go away. I am ready to pray to the stock-market Gods for help. It's insane how this is allowed to go on day-after-day. The good is the trend lines. The long-term up-trend line and down-trend line are pinching. This can't go on forever, unless they start having the S&P 500 trade in a two-point range for a few months. I wouldn't put it past the higher-ups to do it, just to drive the last bull and bear to walk away forever. Today was yet another example of this tedious process. It was a small move up at the open that went nowhere for another six-and-a-half hours. Torture! Some volatility would be nice.
Now, I like a VIX in the twenties, but this little movement is shocking for where the VIX is at the moment. This type of movement is reserved for a VIX at 15, or lower. Where are both sides going? There's no movement to talk about, so both sides have a real shot at doing something, if they'd rush in and play harder. The volume is so low, it wouldn't take much from either camp to get their way. Not to be sadly as we did nothing all day. Once the open was done, you could have left the building, as they say in sports. Today ended up with the usual ending. No one is in control for the moment with a slight, and I mean slight, edge to the bulls, because we're still above S&P 500 1267. I'm sure even the most ardent bull doesn't feel overly bullish right now with the action we're seeing. The same will be true for the bears, which are always in the perma-camp. There's nothing for them to be writing home about. It was another day in the books, and another day of intense nothingness for everyone. So much fun had by all.
The market is churning. We all know that market churning is not my favorite remedy for either side once a move has been made. The bulls took out resistance at 1267. Good job. It was a big day doing it as well, with all the oscillators and internals confirming the move. The natural process, one would think after such a confirming move, is to race higher immediately, thereafter, through the next level of resistance at 1292. Not to be. Perfectly similar to the failure the bears had to endure once they took out key support at 1225 on the S&P 500. A three-day churn that allowed the bulls to take the market back up. Failure by the bears, and now it seems failure by the bulls. Or is it! Tough to answer as the bears, thus far, have allowed this to move on much longer in time than they should have. The Y should already be taking this market down, but so far they haven't. Doesn't mean they won't. Maybe we need to get to resistance at Dow 12,500 and S&P 500 1292/1305. It's so hard to tell what's taking place, with both sides making good arguments for what's to come. The truth is that no one knows. The reasons are complicated, but for now, both sides sit in wonder about the day-to-day action, and what will happen once we get a directional move.
So why is this market holding up? I think the reasons are clear to me, although many won't agree. First of all, it's a safe haven. The news in Europe is so bad, with other news around the globe that's not quite that bad, but it's close. Too many countries are dealing with deflation, or debt beyond their means, and so on, with Europe in its entirety, on the precipice of bank defaults. Look at the behavior of Deutsche Bank AG (DB), the biggest bank in Germany. In free fall these days, Germany is doing the best of all of the Eurozone. When the best in imploding, what does that say about the health of the entire Eurozone. Not a good sign. Money has to go somewhere, and thus, it's running here. On the same topic of safety, although we have debt problems of our own, our economic reports are improving. The world markets are trying to find a place where the risk is least, and for now, due to our economic reports, it appears we have the best situation. Not a good one, just the best one. It's the least of all of evils, if you will. It's a sad reality of the state of the world from a financial perspective, but that's the truth of things, thus, it seems money is rotating here, even if the reasons aren't the best ones.
When a market is acting the way it has over the past many weeks, and especially months, you try to look underneath the hood and see what those internals are saying. If there's some type of clue that will give us insight as to which way this whole mess will resolve. Sadly, there's no help on this front. While the internals haven't been bad, they haven't been good, either, in a way that suggests this is likely to resolve bullish. Even the internals are neutral. It reminds me of a deer in headlights. It's as if neither side trusts what's coming. The bears are afraid the fed will do something to cut their heads off. The bulls afraid the worst news will hit one night out of the blue. That they'll wake up to a minus 500 Dow morning. The bulls have had to deal with some vicious bear markets over the past twelve years, thus, many are gone and the rest are too afraid to get overly involved. Who can blame them to be honest. A few bear markets that have wiped folks out all over the globe. Trust levels are at all-time lows. Both sides are just too afraid for the moment to seize the day.
Resistance at S&P 500 1292, and then 1305/1320. Support is massive at 1267, down to trend line near 1235. With volatility this low, it won't be easy to make strong directional moves. It's possible the market is simply waiting for some resolution on the earnings front. It's hard to know for sure. With earnings season upon us, it'll be most interesting to see how many key stocks beast and raise, and how many key stocks warn for the quarter and the future.
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.
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