It was a very interesting 24 hours for the stock market as it waited to hear how Apple Inc. (AAPL) would do on their earnings report and what was on the mind of our Fed leader, Mr. Bernanke. Apple surely didn't disappoint as they came in above expectations. The stock rocked higher and carried the futures with it. Good, solid action all day in the stock.

Fed Bernanke talked about global financial melt-down risks. It didn't sit too well with the market initially, but he also talked about a slow grinding recovery in our economy and how the housing market was riding along the bottom, but showing a sign or two of bottoming out. Overall, he said all the right things mostly because of what he didn't talk about, which was QE3. No one wanted to hear that he felt the need to add more stimulus as this would suggest deeper debt in our future and that things are worse than we thought. The need for QE3 would be an act of economic desperation, which nobody wants, for sure. He left it out of the conversation and, in my opinion, I think this helped.

The financial potential melt-down did rightly scare folks, but he said it wasn't likely. I guess, everyone knows the dollars will be there if such an event actually took place. In the end, the two events everyone feared would crush the market did just the opposite. Apple came in just right as were the words of the Fed governor who is a champion at trying to control Wall Street.

The Dow is coming through big time when it comes to this particular earnings season. Many stocks are doing very well with their reports, and thus, are being rewarded for their efforts. 3M Co. (MMM), AT&T, Inc. (T), International Business Machines Corp. (IBM) of late, United Technologies Corp. (UTX), and The Boeing Company (BA), have all done great jobs of keeping this market moving in the right direction for the bulls. It's going to be very tough for the bears to crush the market with so many companies reporting good numbers. With Apple doing great on their report, as well, this will help hold up the Nasdaq stocks so there seems to be some protection coming into this market from the world of earnings, which is a necessary part of remaining in this bull market a while longer.

In the end, it is about earnings. For now, the numbers are good, and seemingly getting better as the season moves along. None of this means the all-clear is in for this market, because it's not. There is still a massive base/handle forming, and there will be lots of back and forth in the weeks, and months, ahead, but these good reports on earnings helps solidify, I would think, the idea of a longer-term base/handle forming from which to trade once a bottom has been truly established.

Stock dancing is not an Olympic sport I want to see become established, but that's the game we're in right now. Unfortunately, we have to deal with some very large swing in stocks as the base formation takes place. It's not fun watching stocks dance up and down multiple dollars very frequently. It plays on your emotions, and sadly, can cause you to make some very poor decisions on what to do with your stocks. Large bases/handles are known for causing the most emotional responses from traders, because one day the bears feel great about the poor action and load up on the short side. The next day the market reverses and trouble hits their aggressive new plays. Same goes for the bulls who think a good day means every day will be good again.

They get aggressive, and get disappointed, when their plan doesn't work out as they thought it would. And the end result is usually bad trading habits. Emotional responses. Keep it lighter in this type of market and try to use weakness in a stock overall to buy. There are always exceptions to that, of course, but try to be patient in this type of market environment.

The S&P 500 has great support at 1357, and then from 1340 down to 1325. 1422 is that elusive last high of powerful resistance. Everything in between 1325/1340 and 1422 is only noise in the base set-up. Relax with it all. Understand what's taking place, and it'll be easier on your nerves not to mention your playing habits. The market will deal with alternating good news days and bad news days. Just know the proper levels and all will be fine.

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.

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.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.