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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Stock Market Sliding Sideways...Endlessly It Seems....

Stock-Markets / Stock Markets 2012 Jul 17, 2012 - 03:47 AM GMT

By: Jack_Steiman

Stock-Markets

Wednesday and Thursday of last week we saw the market take a move lower that appeared to be the beginning of a breakdown. The bears were licking their chops as the time was here for them. Then along comes Friday and a gap up that ruins the best laid plans. The market surges with the daily charts becoming very neutral once again. Today, instead of following through to the upside, we fall again. Nothing major, but, of course, no follow-through of any kind. And so it goes. Endlessly it seems. We are to the point, or at least I know I am, where I am begging for some type of breakout or breakdown that shows something more directional in nature. This whipsaw is so boring it makes it tough to get through the day, extremely boring as the volatility is gone. We simply move back and forth between a few hundred Dow points.


Nothing major ever takes place even though the news seems to say it should, good or bad, mostly bad, of course, these days. There's nothing happy going on around the world with regards to economic health. So here we are again after yet another meaningless day of action. What will tomorrow bring? No one knows, and that's just the way it's been for the past seven months in these wedges to nowhere. You need to play lightly and slowly with tight stops, or you'll take a hit you won't want to take. The emotion of the game will take you out. Anything aggressive tells me you want out of the game. You are looking for a bad experience. Don't be that person. Be smart and adapt to what we're dealing with now. It could last a lot longer so be prepared.

The best earnings thus far have come from the banks. The bar was set very low and even with headaches, such as the one from JPMorgan Chase & Co. (JPM), the stocks have been reporting better than expected earnings. The best looking charts are in that sector, which sounds strange to say. There are others that aren't bad, but it's good to see the banks leading the way, for now anyway. The banks have lagged for so long, it would be nice to see the reversal start to be the norm. Those stocks will have to continue performing well for this market to break out, or at the least, prevent it from breaking down. If they break down from here, the market has no chance to hold up. They're heavily weighted and very important to the health of the entire global system.

If the banks go away, so does the stock market here and abroad. No one will have a chance. Goldman Sachs (GS comes out tomorrow morning. So far Citigroup, Inc. (C), JPMorgan Chase & Co. (JPM), and Wells Fargo & Company (WFC) have come in well. It would be great if Goldman Sachs can hold their end of the deal. If not, things can change very quickly. Keep an eye on those earnings going forward. Watch those charts closely for market insight. The financials are always very telling about how the market will do.

It was right around this time last year that the market collapsed to the tune of 550 Nasdaq 100 points approximately. I hate to compare time frames, but the dire global circumstances certainly make you take notice. Nothing is exactly the same, but the selling last year, roughly starting about a week from now, was very intense. Straight down. No mercy. Is there news out there like Greece leaving the Euro? If that happens, you can say goodbye to the stock market yet again from later July onward. Of course, it wouldn't matter what time of year it was if that news hit, but you have to recognize the time of year for what it is historically. It's not a good time of year for the bulls most of the time, so we don't need the type of news to hit that gives the market the excuse it may actually be looking for. There is a piece of news to match seasonality and take this market down hard. It would have to be the worst type of news, such as Greece leaving the Euro, but that possibility exists as there's stories out there saying Greece is not living up to their end of being bailed out. Have to watch for that in the coming days and weeks.

The market is playing between gaps and moving averages and just about everything else these days. There are some very difficult resistance levels ahead, but none tougher than the Nasdaq 100 gap at 3000. A wall of resistance to be sure. It would take a lot of good news just to get that high, but if we did, you can expect the market to take a hit for at least a little while. Great support at gap at 2865 and again at the 200-day exponential moving average at 2839. Both sides have their work cut out for them. Who will take control is dependent totally on news. Not a fun way to go about things. We are trading between all these levels, and thus, we should be playing quite lightly. Do not get aggressive in this environment, would be my advice, but do what feels right to you, of course. There will surely come a day when we can play aggressively. That's not here now. Adapt to it or pay the financial price.

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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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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