Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

More Bad News From China.... Stock Market Yawns....

Stock-Markets / Stock Markets 2015 Oct 20, 2015 - 08:49 AM GMT

By: Jack_Steiman

Stock-Markets

China reported their growth numbers yesterday and they were very poor. They were lower than expected, and showed the slowest growth in six years. Not good news again on the economic front, especially since China is such an important importer and exporter of goods. This news gave our market the excuse to sell today, since we are overbought not only on the sixty-minute chart, but on the daily charts as well when we look at stochastic's.


The top level is 100 and we're at 99. RSI is yet to hit overbought, but the MACD's are elevated as well. The economic excuse was in place. The technical excuse was in place, and the result was the usual these days. Not much if there is any selling to talk about. That's what happens when froth turned pessimism in reverse and takes hold of the market. It gets very hard to sell the same way it became very hard to go higher for a very long time. Too much froth led to lateral and then down.

Now we have too much pessimism. Remember, the market doesn't trade on truth. It trades on emotion for the most part. Yes, there are times it seems to run on truth, but when we think it's truth all it really come down to is emotion. The excuses to move up and down are used only when the market wants it to. We see many times when good news is good and bad and vice versa. It just depends on how emotion is ruling the market at any given moment in time. So now with the market feeling better because there's too much pessimism, it's having a hard time unwinding from overbought. We need to sell some as it's not healthy bigger picture to remain overbought too long, because then the selling needed to unwind will have to be deeper both in price and time. For now, the markets behaving as expected. Too much pessimism still in place. Let's hope we can get a bit of selling soon to unwind.

The market tried to break out on Friday over the key, S&P 500 2030 or 200-day exponential moving average level, but made it through by only three points, which does not constitute a real breakout move. Today it closed, once again, right around 2030, but as I mentioned above, at overbought conditions. I would like to see a breakout to 2050 on a closing basis. This would tell me the bears are in real trouble, and then maybe a pullback would only retest the move. The market can stay overbought, and make the move, but this is not the best way for that to take place from a risk reward perspective. A move back down would reset things and give the bulls the energy necessary to make a truly clean breakout move that can stick over time.

A breakout move over 2030 now would likely be a head fake. Not definitely so, but it's far more likely to be so, thus, once again. I would prefer a resetting of all the daily and sixty-minute oscillators. The market doesn't usually give us what we want, but in the end you have to decide when the risk reward is proper, and if we break out here it's not exactly what I'd call risk reward proper. I will get into more plays once and if those oscillators reset. It's best to stay less aggressive out of fear of missing. This doesn't mean a good play on its own can't set up even if the market is overbought. So I will search around to see if I can find that, but overall it's not best to get aggressive at 99 stochastic's on the daily index charts. Do what feels best to you.

I think there's only one likely event that could prevent this market from testing the old highs at 2134 and that's a negative, ISM Manufacturing number on the first business day in November. Negative meaning any number below 50.0. That's the number that separates a growing economy from one that's in recession. As long as the number comes in at roughly 51, or higher, we should have a decent shot at testing back up to, or near, the old highs if not making a new high altogether. For the moment we watch 2030 and a close above with force. We also focus on the nearest areas of support, which comes in at 2020 down to 1995. A day at a time as always.

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!

© 2015 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.


© 2005-2022 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