Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Bears At 27 Year Lows... Complacency At Extremes....

Stock-Markets / Stock Markets 2014 Sep 04, 2014 - 08:12 AM GMT

By: Jack_Steiman


What can you say. I warned this morning that buying the gap up probably didn't make muchsense. Buying any strength in a froth-driven market probably isn't the best idea. After a large gap up to start the day, we saw the key-index charts close with either nasty black candles, or worse, red candles, especially the Nasdaq and small caps. The selling wasn't intense, but the closes were well below the gap up open suggest sustained upside will likely be tough for a while here. In normal times, these types of candle sticks would be the prelude to some very intense short-term selling, but you can't count on that here since the rate driven bull is still very much alive.

Again, we should sell from here, but you can't be sure, especially since we also have the ECB talking about an infusion of QE tomorrow morning before the market opens. I think he'll give what the market wants, but I also believe all of that good news is likely in the market. We shall see, of course. The environment is not easy for either side, but the market seems as if it's at, or near, an important near-term top. I didn't say longer term, but I think short term, getting sustainable strong upside from here is going to be more than trouble for the bulls. Adjust to the environment and you'll be fine. Best advice I can give is I wouldn't be very long from here or opening too many new long plays.

Now we turn our attention to the biggest headache facing this market. It isn't the only headache and a big one at that as we are dealing with negative divergences on basically all the key-index charts on the weekly charts and even further out than out. Some of them are getting worse and worse as we grind higher. The longer they go out in time the worse off the bulls should feel about things for they will have to unwind at some point. There is no choice in the matter, but now to our real headache that trumps even those nasty negative divergences. Froth. Not just froth but 27 year level of froth. The bears are now down to 13.3%. This level of bears hasn't been seen since 1987. The market crashed at that level, BUT please remember that interest rates back in 1987 were well in to double digit territory.

There is no way to grasp or understand how we should expect the market to correct off this terrible level of complacency. Will it be 5%? Will it be 20%? No one knows. We can only learn as things move along but the 42.8% bull-bear spread along with 13.3% bears is a disaster for the bulls and will be forced to unwind over time. There's no way around it. The level of bears would scare me enough to avoid longs completely for a while. The risk is off the charts. Do what feels right to you, but know at some point that bull-bear spread will be in the twenties if not much lower.

Yes, this is no fun. It's not fun to wake up to gaps that reverse this hard and it's no fun knowing how tough sustainable upside will now be. It's no fun knowing that we will have to sell hard sooner than later, again, even if we move up first to another new high although that will NOT be easy. The market doesn't always have to be fun to be very interesting. Just relax and understand what we're dealing with. Stock collapses like we saw in Apple Inc. (AAPL) today is what we'll see in the market indexes at some point in the near future. Some down action will be very intense. It won't be straight down.

We're still very much in a bull market, but the topping process for the short-to-medium term, I believe, is under way. We'll see if this is correct or not over time, but I think you'd all be best served with extreme caution being your way of thinking.


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.

Sign up for a Free 15-Day Trial to!

© 2014

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 - 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