Stock Market Tired?......Nothing Bearish.....
Stock-Markets / Stock Markets 2012 Aug 28, 2012 - 02:25 AM GMTBy: Jack_Steiman
The market was playing off the news that came in just after the close of action on Friday. It was, as usual, good news about Apple Inc. (AAPL) and their lawsuit against Samsung. The jury voted in their favor for a huge cash reward and licensing issues. The stock soared $20 after hours, and thus, the futures shot up as well. Google Inc. (GOOG) was adversely affected, but isn't as heavily weighted. The futures held up overall over the weekend, with Apple gapping up nearly all of those $20 it received after hours on Friday. The S&P 500 and Dow gapped up, but those gap ups were very tiny in nature. Again, Apple being the stock market.
There should be separate stock markets, Apple, and then everything else separate. No amount of froth can kill this stock, but it did close with a black candle today, meaning on-balance sellers after the gap up, which almost always means a top for a stock short-term. You never know with Apple, however, as it always defies logic and technical analysis, especially when the technical work gets a bit more on the sell side. We saw the market pull back as Apple pulled back with some black candles printed across the board, especially on the Nasdaq.
It should, again I say should, produce at least a little selling in the days ahead. But keep in mind, we're more in bull mode, thus, it shouldn't be more than 2% worth of selling down to S&P 500 1380. It doesn't have to get that low, but that would be normal based on today's sticks. Bottom line today wasn't terrible, but the market did act as if it's a bit tired, and thus, some caution short-term is warranted. We shall see. Some small unwinding would be healthy and not bearish.
The market has its attention turned to Mr. Bernanke, who will make a big speech about the economies of the world, and what the best minds in the world are planning at this time to deal with the huge problems hanging over the heads of the entire Eurozone. He has hinted recently that QE3 was on the way, but he loves to threaten in order to get the market higher. Once the market rises, he gets relief and puts QE3 on hold. He may disappoint some by saying just that on Friday. That QE3 is still out there and will be used if necessary, but for now he doesn't see the need to push it through.
It's the belief of many that this will cause a strong push lower in the market. I don't necessarily agree with that thinking. I think he'll be sending out a message that things are more under control, and after a quick move lower it's my guess things would be bought up again. It's always possible he will institute QE3 on Friday, but I don't think that'll be the case. Again, any stronger selling from traders will likely be bought up shortly thereafter. Use weakness to buy if it occurs.
The market saw most of its indexes, except for the Nasdaq, hit the top of their wedges and start to struggle. We showed how 1425/1430 was the top of the wedge on the S&P 500, and since we hit that level, we have paused, but not really sold all that much. Only 1% off the top for now, although it could become 3% before the selling stops near 1380. It's not a guarantee we go that low, but certainly a possibility. The fact that the daily charts are unwinding their oscillators without too much down side price pressure usually is bullish bigger picture, although the short-term can get choppy causing some fear. Many of the daily stochastics have pulled back more than half way down their scales. Good to see.
RSI's are also unwinding back down with the MACD's lagging a bit as they always come down last. All in all, it's good action for the bulls as they're keeping the S&P 500 not too far from the big breakout level of 1425/1430. The next week or so should be telling, especially once we hear from Mr. Bernanke on Friday.
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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