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Stock Market Waiting.......

Stock-Markets / Stock Markets 2012 Dec 15, 2012 - 01:27 PM GMT

By: Jack_Steiman


Aren't we all! It's so disappointing to look at the market and wonder who will say what in order to move the market one way or the other. We all find it hard enough playing the market when things are normal. We don't need to be victims of news based on one specific topic, the fiscal cliff. One word positive or negative causes huge moves, and with no way to know who will say what and when. Anything you do carries a ridiculous amount of risk. One minute they say they're going to talk, the next minute they say they've made no progress. Up and down, down and up. Makes you sick. No way to get aggressive either way. Short too much and you get smoked. Go long too much and you get smoked.

Whatever you do too aggressively you get smoked because the more you do, the more emotional you get, and when you're emotional you have no chance. Simple as that with the ultimate truth being you can't avoid being emotional in this crazy game, so buyer or seller beware, nothing is going to be easy for a bit longer to come. Getting a directional move will only come when we know what the final outcome will be from those who lead us. That may not be until December 31st. Today was another day when good news around the world in terms of growth, places such as China, normally would have moved us higher, but the headache of the fiscal cliff didn't allow us to follow along.

Like all markets, some areas of the market hold up better than others. This particular market isn't all down at one time market, which is why it has held up so well even with all the uncertainty. The market has been shying away from froth, stocks such as those that live in the Nasdaq and looking towards lower P/E, lower beta, higher dividend plays, which is why the Dow is out performing. The Dow chart is the best around. S&P 500 is not bad. Small-cap stocks and mid-cap stocks are not bad at all, in fact they're somewhat better than the Dow. The Nasdaq, however, has lagged quite a bit. Apple Inc. (AAPL), the biggest culprit as it is, sitting in an ongoing bear market of its very own. The best has turned into the very worst, which is normal behavior for any stock over time.

Like all of us, all stocks eventually get old and die out. It has always been that way and always will be in all likelihood. The transports and the financials have been pretty good, while the technology stocks and the retail stocks haven't been nearly as strong. Some of the stocks in those two sectors have been getting pummeled. Try to focus on the best of the best sectors while avoiding the worst until the trend changes. Don't front run it. The bears need everything to cascade lower all at once and only the fiscal cliffs non-resolution will likely get that deed taken care of.

If we study the weekly charts we can see some long tails off the tops on all of the major indexes. After a few weeks of upside action, these types of long tails normally portend some downside action to come with no way of knowing just how far down we can go. It doesn't have to play out negatively as there can always be good news regarding the fiscal cliff over the weekend, but the threat of downside action is real when you print long tails off the top and close at the lows on the weekly charts. 2955 is key support, or the 200-day exponential moving average on the Nasdaq. Below that is gap support between 2940 and 2930. Somewhere in that range we should hopefully find a low, but we shall see what next week brings.

Be careful and keep it very light.



Jack Steiman is author of ( ). Former columnist for, 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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© 2012

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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