Stock Market Sorry Folks, Still Nothing from Nothing......
Stock-Markets / Stock Markets 2012 Aug 07, 2012 - 02:12 AM GMTBy: Jack_Steiman
And who knows how long it'll keep on keeping on. Day after day, week after week, and month after month, now in month number eight, the market plays see-saw and whipsaw with our emotions. So many times you'd bet hard that we're about to break down, only to see those 200-day exponential moving averages catch us, when it looks like they can't. Other times, like the past few days, breakout seems inevitable. Inevitably it doesn't. We hit Nasdaq 100 3000, the bottom of the massive gap down with the top at 3025, only to see the bulls fail as we pulled back late in the day. No energy available for the bulls to make the breakout which mirrored the bears at those 200's. Simply no energy, and thus, failure.
So here we are, with the markets near massive resistance, wondering if we'll get the breakout through 3025 in time. If we clear 3025, we are off to the races. You all realize by now how hard 3025 will be for the bulls, let alone 3000. So we got to the bottom and held. Four separate tests of those 200-day exponential moving averages. Four failures by the bears. We are now at the top. Failure number one occurred today at NDX 3000. How many more tests are coming? Whether we'll actually get through is something we'll find out soon enough. With the market still in its big-picture wedge, we have to say that more failures by both sides are likely, although you always remain open to a potential breakout, since we are now near the top. For now, it's nothing from nothing for everyone.
Germany's leader, Angela Merkel, has agreed to get involved with bond sales. That boosted the overseas markets last night, and allowed our futures to creep higher, although not as strongly as one might have thought likely based on such news. We opened higher and kept going until we hit NDX 3000. There was little volume to help the situation for the bulls. When you get to important levels, such as NDX 3000 is, you will need to see volume come in from the bulls, or it'll be too easy for any selling to put a stop to the advance. Volume is over rated overall, except when it comes to critical levels of breakouts and breakdowns.
This NDX 3000 level is extremely critical, thus, I guess, no shock that 3000 failed so easily today. No power, or thrust, came in at breakout time. It wasn't a bad day, however, as at least froth led again. Stocks that are weirdly over valued held up the way you'd like to see them do so, if you have a longer-term bullish outlook. They sold the risk off stocks, mostly, as the day wore on as the froth held a decent amount of its gains. Good to see, for sure. So, although today did fail, at least the Nasdaq 100 led higher. That's a real positive for the bulls, for sure. It gives hope.
I get questioned often about how long I honestly believe these markets can get whipsawed around. I can answer by telling you it's unclear, because of the two opposing forces in place. Europe's problems are not going away any time soon, although we'd like to fantasize about it. The problems are just too deep across the entire Eurozone. No one has been able to come up with a solution, so the market can't break itself out. With the Feds around the globe protecting by adding cash daily, the markets don't seem to want to break down. Interesting, because the previous cash pumping did nothing for anyone, yet hope springs eternal when it's mentioned that more free cash is on the way.
Let's face it folks, people want the markets to go higher, because interest rates are so low the market is the only place where anyone can possibly get a return on their dollars. Money keeps finding its way into the market, because rates are near zero, and no one wants to tie up too much cash for the longer-term in those instruments that offer such ridiculously low rates. An intentional act by the Fed, by the way, as I'm sure, you have realized by now. We are also better off economically than Europe ,so we are the lesser of two evils, and thus, in the end, our market holds up decently. And so it goes. On and on....!
In the end, the winner is the side that breaks critical resistance, or critical support first. 3000 up to 3025 is the big breakout for the bulls, while Nasdaq 100 2851 is the 200-day exponential moving average. If we clear with force and volume, above or below, then we get a real directional move. It'll be the first in a very long time, and, I think, all of us want that at this point. I think people don't care too much if it's a bearish break. Just give us something directional.
For now, you play lightly and watch to see how the bulls fare at Nasdaq 100 3000/3025. All we can do day-to-day is watch and learn as we're governed daily by the news du jour.
Slow and easy is still the only way to play unfortunately.
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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