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Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Stock Market Beta Be Gone....

Stock-Markets / Stock Markets 2012 Apr 17, 2012 - 01:34 AM GMT

By: Jack_Steiman


There are many different ways for the big money to get rid of overbought sentiment. Take the market down one sector at a time, or just attack all the high beta stocks from all over the market place and knock them down at the same time. (PCLN), Apple Inc. (AAPL), and Inc. (AMZN) just to name a few. The list is very, very large, indeed, and that's what we saw today. The Dow stocks were holding up very well as the market participants ran to safety, with those high dividend lower beta stocks. Sometimes you can run and hide and sometimes you can't. In a bull market, if you're lucky enough to be positioned in the right place, you can get away with the selling. If you're in the wrong place, however, it's lights out. If you were in beta today, it was a lights-out day, and not a fun day at all.

The market gapped up across the board, but it didn't last long in technology land as those high beta stocks were crushed in a few minutes time. A straight, down 60-minute bar that showed no mercy on any of these stocks. No chance to really even respond as it was very quick and nasty. Many dollars came off these stocks in a heartbeat, which turned the Nasdaq from very green, to very red, although the Dow hung in beautifully. The game of unwinding the stock market oscillators continued in this fashion today with no way of knowing how they'll do it in the days, weeks, and months to come. Whipsaw not only applies to price in a large base, which is setting up, but it also applies to how, and which, stocks get taken down. You just never know from day to day. Even when they look perfectly set up in their bases, they can get smoked lower. Today was that day for the beta stocks. The unwinding continues.

As the months go by and we're still trading in the range yet to be completed in all likelihood, the frustrations will build. A lot of negativity will be out there, and the market will feel lousy. It may, about that time, or maybe sooner, who knows, that Fed Bernanke starts to talk up some additional monetary help for the economies both here and abroad. That would be the necessary tonic to get the market moving back higher once again.

He doesn't want to act too early as for now there's no real technical damage to the stock market, but if and when he decides the market needs its next boost higher, he will be sure to act. He could wait for the June meeting, or simply act in between the April and June meetings. He can do whatever he wants, when he wants, and will act when he feels the timing is right to get the market to make its next move higher. Keep a keen eye on the maestro of market magic as he'll be sure to act when he feels the economy is desperate for its next leg up by creating wealth in the stock market.

You have to keep your mind open to all possibilities including the fact that maybe something deeper is going on here, but there is no evidence pointing to the fact that this is anything more than your normal correction that likely isn't over yet. We shall see, but 1340 is still very much in play, which is massive horizontal support. If Europe were to deal with a major financial melt down, even with help from all over the world, which would occur, then it would be lights out for every market around the globe. The markets would simply implode, and open up the door to the bear, which is coming at some point not too far out there. Could be 2013. Maybe a bit later, but its out there as all the debt and troubles will definitely catch up at some point when all the realistic weapons have been used up.

All in good time, but for now there is nothing that suggests the end of this bull is here yet. Always on the watch for that but I see nothing suggesting it right now.



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.

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© 2012

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.

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