Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
AI Tech Stock PORTFOLIO NAME OF THE GAME - 29th June 22
Rebounding Crude Oil Gets Far Away from the Bearish Side - 29th June 22
UK House Prices - Lets Get Jiggy With UK INTEREST RATES - 28th June 22
GOLD STOCKS ARE WORSE THAN GOLD - 28th June 22
This “Bizarre” Chart is Wrecking the Stock Market - 28th June 22
Recession Question Answered - 28th June 22
Technical Analysis: Why You Should Expect a Popularity Surge - 28th June 22
Have US Bonds Bottomed? - 27th June 22
Gold Junior Miners: A Bearish Push Is Coming to Move Them Lower - 27th June 22
Stock Market Watching Out - 27th June 22
The NEXT BIG EMPIRE WILL BE..... CANZUK - 25th June 22
Who (or What) Is Really in Charge of Bitcoin's Price Swings? - 25th June 22
Crude Oil Price Forecast - Trend Breaks Downward – Rejecting The $120 Level - 25th June 22
Everyone and their Grandma is Expecting a Big Stocks Bear Market Rally - 23rd June 22
The Fed’s Hawkish Bite Left Its Mark on the S&P 500 Stocks - 23rd June 22
No Dodging the Stock Market Bullet - 23rd June 22
How To Set Up A Business To Better Manage In The Free Market - 23rd June 22
Why Are Precious Metals Considered A Good Investment? Find Out Here - 23rd June 22
UK House Prices and the Inflation Mega-trend - 22nd June 22
Sportsbook Betting Reviews: How to Choose a Sportsbook- 22nd June 22
Looking to buy Cannabis Stocks? - 22nd June 22
UK House Prices Momentum Forecast - 21st June 22
The Fed is Incompetent - Beware the Dancing Market Puppet - 21st June 22
US Economy Headed for a Hard Landing - 21st June 22
How to Invest in EU - New Opportunities Uncovered - 21st June 22
How To Protect Your Assets During Inflation - 21st June 22
AI Tech Stocks Current State, Is AMAZON a Dying Tech Giant? - 20th June 22
Gold/Gold miners fundamental checkup - 20th June 22
Personal Finance Tips: How To Get Out Of A Tough Financial Situation - 20th June 22
UK House Prices Relative to GDP Growth - 19th June 22
Will Global Markets Be Pushed Deeper Into Crisis Event By The US Fed? - 19th June 22
Useful Things You Need To Know About Tweezer Top Candlestick Pattern - 19th June 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Bouncing.....

Stock-Markets / Stock Markets 2012 Nov 20, 2012 - 02:01 AM GMT

By: Jack_Steinman

Stock-Markets

Friday printed the type of candlesticks across the board that suggested the market was ready for a counter-trend rally. I wrote about it in the newsletter over the weekend. Strong reversal sticks on increasing volume told the world that the bulls needed to play for a while as the bears sat it out for a few days. Like a ball player, everyone gets tired if you're in there day after day. The bears had certainly been in there day after day and had to tire eventually. Friday suggested that was about to take place.


That said, we gapped up this morning and, although it wasn't a gap up and explosion, it was a gap up and hold that trended ever so slowly higher throughout the day. Full candles overall suggests it will be a while before the bears can gain back full control of the markets. If there had been very long tails at the end of the day it would have made getting lower easier on the bears. But these are basically full candles which will hold the bears down for a while until things can likely unwind further up.

It makes sense that the rally was strong today and should continue some when you look back at the degree at which this market sold, making those momentum oscillators extremely oversold for a very long period of time. When you get too oversold for a longer period of time than would be considered normal, when the rally ensues, it usually goes on for a while as it takes time to get all of the oscillators out of oversold. They're not just going to go from 23 RSI's to 30 RSI's and then rush back lower. It usually takes time to get them well over the 30 level, often approaching 50, and sometimes even breaching above that some.

Pullbacks that take the market to extreme levels of oversold are no different rushes higher that take the market to extreme levels of overbought. When it snaps in reverse the moves can be stronger than one thinks is likely. That's why it would not shock me to see full back tests of those long ago lost 50-day exponential moving averages. That would take the S&P 500 back up towards 1410. It doesn't have to go that high but it is in play and from time to time you get breaches above the 50's simply because of the short covering that takes place when markets rise. Bears tend to jump ship rather quickly. We watch with interest and hope the S&P 500 can make its way towards 1410 in order to give people some relief.

It will be very interesting this Wednesday when we get the report on how the bull-bear spread is progressing. Last week was a bad week for the market, thus, I expect the numbers, or the spread, if you will, to have gotten even more narrow than the nine percent spread we had the week prior. It's starting to get down there. It may be approaching zero but, whatever the number is, it will show more bears and less bulls in all probability. There is no headache, though, on the sentiment front, and it's one I don't necessarily understand.

The VIX continued to be very low, and that was before today's rally. When the market was cascading lower, the VIX refused to rush higher, which is quite abnormal since we were breaking key support levels along the way. This bothers me somewhere deep down. We shall see if this comes home to haunt the bulls in the weeks ahead. It would have spiked but refused to do so. Very strange. It has no trouble falling at the first hint of upside action, but it won't fall much on even the worst of market days. That's something to be explored and watched very closely on the next pullback.

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.

Sign up for a Free 15-Day Trial to SwingTradeOnline.com!

© 2012 SwingTradeOnline.com

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.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

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