The market had a huge move a few days back when the fiscal cliff news was settled positively, the Republicans giving in to the news due to the fear of market conditions. They took a right cross as they swallowed the tax headaches in which they wanted no part. It was good news for the market, and we saw that with the huge move higher. We have spent the past three days moving laterally or consolidating that move. Good action technically as we are not seeing big volume come back in and take this down with any force. No head fake on the bull on the side of the move.

When markets move laterally, it's usually because they got overbought, which we did on a couple of the daily charts, especially on all the short-term 60-minute charts. Good action when there's not a lot of price erosion, and yet we're able to unwind those overbought oscillators back to neutral or close to neutral. There's no excuse if you can't get going back to the upside from there. We shall see in the days ahead, but the bulls, based on this action, really should be able to make new highs not too far down the road. It may be the last move up, but they should be able to do so. We'll watch closely, but the technicals say it shouldn't be long before some type of move is made with upside progress attached to it.

The market faces two big challenges the rest of this year. Either one of them could put the bull market to its death. First we will deal with the debt ceiling in which the Republicans have said they will make no more concessions. Since they did on the fiscal cliff, it's now up to the Democrats to give in on spending problems. If this isn't the case, and if the Democrats say no to that, the market will get crushed. No ands, ifs, or buts about it.

The market will get hit extremely hard. Beyond that, by years end, Mr. Bernanke has said it is more likely now that the QE programs will come to an end. No more free cash such as we've seen for years now. If the Fed Bernanke does pull the trigger, and/or the debt ceiling doesn't get solved, we could see some very large losses. As usual these days, there's a ton to worry about and have to deal with as time moves along through 12013. By February we'll deal with the debt ceiling headache, which needs to be resolved by March 1 st, I believe, and then all year, when the Fed minutes are announced, we'll be reminded about the QE programs that will probably going away by years end. Sounds like a barrel of laughs to me.

For now, stocks are simply moving lateral. The S&P 500 is closing in on a breakout over 1470. A strong clearance of that level would set up a move to the low and possibly even the mid 1500's. Apple Inc. (AAPL) is trying to put in some type of bottoming stick, but maybe we need to turn our focus away from it as it has been crushed, yet the Nasdaq has hung in there extremely well. Good news for sure on that front, but it can only help to have AAPL bottom out, even if it's just for a little while. Staying on the long side seems best since all of the daily patterns are bullish in nature.
I am watching 1470 on the S&P 500 for more insight.

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.

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.

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

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.