Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19
The Narrative About Gold is Changing Again - 2nd Dec 19
Stock Market Liquidity & Volume Diminish – What Next? - 2nd Dec 19
A Complete Guide To Finding The Best CFD Broker - 2nd Dec 19
See You On The Dark Side Of The Moon - 2nd Dec 19
Will Lib Dems Win Sheffield Hallam From Labour? General Election 2019 - 2nd Dec 19
Stock Market Where Are We?  - 1st Dec 19
Will Labour's Insane Manifesto Spending Plans Bankrupt Britain? - 1st Dec 19
Labour vs Tory Manifesto Debt Fuelled Voter Bribes Impact on UK General Election - 30th Nov 19
Growing Inequality Unrest Threatens Mining Industry - 30th Nov 19
Conspiracy Theories Are Killing This Nation - 30th Nov 19
How to Clip a Budgies / Parakeets Wings, Cut / Trim Bird's Flight Feathers - 30th Nov 19
Hidden Failure of SIFI Banks - 29th Nov 19
Use the “Ferrari Pattern” to Predictably Make 431% with IPOs - 29th Nov 19
Tax-Loss Selling Drives Down Gold and Silver Junior Stock Prices - 29th Nov 19
We Are on the Brink of the Second Great Depression - 29th Nov 19
How to Spot REAL Amazon Black Friday Bargains and Avoid FAKE Sales - 29th Nov 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

Manufacturing Hits The Global Stock Markets...

Stock-Markets / Stock Markets 2016 Jan 05, 2016 - 03:16 AM GMT

By: Jack_Steiman

Stock-Markets

The market futures were up a bit early last night. The S&P 500 was up about six points, while the Nasdaq was flashing upward action by fifteen points. A nice way to start the new year after a poor 2015. The last two days of the year 2015 were nasty, thus, the bulls were looking for something positive to break the chain of poor-trading action. The good news didn't last long as China reported news on their manufacturing front, and it was ugly to say the least. Ugly to the tune of being down between seven and eight percent.


The equivalent of us seeing the Dow down 1,500 points. Our futures reacted instantly to the down side. Slowly at first, but acceleration as the evening wore on ultimately led them to a strong down opening. The bulls still held out hope, however, we had our own manufacturing report to deal with thirty minutes in to the trading day. It was a good number, or a real surprise, meaning a number over 50.0 would surely wipe away the losses, or at least most of them. The number came in at 48.2. Lower than expected, and, thus, no dream reversal for the frothing bulls. The market didn't collapse on that news, but finding sustainable upside became impossible for the rest of the day. A very nasty day for the bulls, but one that had the bears smiling from ear to ear.

It seems the market has finally found the type of news on a global basis that won't allow anything that Yellen does to cure its ills. The market is finally giving it up with some force behind it. Not the most tremendous volume to verify price, but clearly an increase worth noting as those moving averages started to vanish. Based on what happened in China, and then our own very bad news, it's amazing the market held up as well as it did, even though the losses were quite significant. Folks, it could have been a lot worse. The U.S. market always seems to hold up better than the rest of world when things go badly. That said, it's not as if today was a winning day for the bulls. It needs to be respected for the message it sent, which clearly is to tread slowly in a very dangerous environment. Cash seems to be an evil word to traders, but it's a lot better than taking completely unnecessary losses, because you don't have the patience needed to be appropriate. Today was a massive gap in a series of gap downs, which means nothing will be easy for the bulls, even if we rally off of oversold, short-term conditions. There are lots of moving averages and gaps to get through, and with today's increase in volume, it'll be that much harder to trend higher short-term unless something completely unexpected hits. While that can always happen, there's enough damage here to make things really tough on the bulls, at least for the short-term.

I believe in both the technical side and the fundamental side of the equation when studying the markets, although the fundamental side rarely plays in to how things move. Bad fundamentals are often ignored in a non-going, bull market. They're out there, but they just don't get the respect they deserve. The frothing bulls keep wanting more and more. I keep those fundamentals in the back of my mind, but you have to wonder what it takes to get the market to act according to the truth of things rather than the Disneyland it usually lives under. There's never an easy answer for that. It seems as if the world took notice today when China threw in the towel. Our own bad report added to the acceptance that things really are bad out there. If the U.S. is doing fine, and the rest of the world is not, it seems as if the markets will hold up. It requires a global acceptance of bad news to get us moving lower.

Remember that markets love to go higher most of the time, and that's why bad news can be ignored. An excuse can be tied to bad news, such as, well, at least rates will stay low, etc. It all gets tougher when bad news on a fundamental basis gets tied in with bad technical news, and, no doubt, we have that with the monthly charts no matter where you look. Powerful negative divergences abound. I believe those monthly charts have held back the bulls over the past year plus. Now the fundamental news is eroding and the combination was simply too much today. It's hard to get markets to move lower folks. It takes a long time to turn it as well and that's if we're indeed turning. The market still hasn't sent the bulls out to pasture officially. Maybe the weakening fundamentals, along with poor technicals, is starting the process on its way. That's still not totally clear.

Let's look at longer-term, key-support levels below 1993. A nice gap exists at 1951/1954 on the S&P 500. There's weekly, trend-line support at 1925, and there's also horizontal support a bit lower at 1872. Beyond pure-technical levels we also need to try and understand the role of pessimism. Under normal circumstances I would think it's very hard to get a real rip-roaring, bear market started with the bull-bear spread at roughly 10%. With today being the new year's, first-trading day this will take a big hit downward. If the spread gets to, let's say, minus 10%, it's hard to imagine it going too much lower from there, so maybe only a correction is possible short-term. It's unclear, since the Fed Yellen has taken unprecedented action over an incredibly long period of time. Maybe that would allow the spread to get never-before-seen negative readings. It's just too unclear for now. Normally anything double digits below zero would stop the selling. If we get there it'll be very interesting to see what things look like.

Sentiment is definitely on the side of the bulls from here, but can definitely go appreciably lower before we have to wonder when it's too negative for continued down-side action. In an environment such as this it's definitely best to be heavily involved with cash. The market needs to show a lot more before we fully understand the short to medium term message. I don't know what catalyst can come along and blast this market higher, but you never know. When you have the Fed and the Government on your side there's always hope, but without interference or possibly even with it, the market doesn't look very good for the bulls right now. A very interesting time to be sure. Staying safe is best by not over playing. Do what feels right to you, of course.

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!

© 2016 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

6 Critical Money Making Rules