Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Status Quo... Stock Market Bulls In Complete Control...

Stock-Markets / Stock Markets 2016 Jul 20, 2016 - 06:54 PM GMT

By: Jack_Steiman

Stock-Markets

A chart was shown today between gap earnings and the movement of the S&P 500 500. The last time the gap was this disconnected was in 2007, the year before the big market crash. Will history repeat itself? Hard to say back in 2007/2009 we didn't have this type of fed protection against any sustainable market downside action. The fed is making sure things stay positive for the markets, so as to keep the economy moving upward, but it is interesting to note how badly the disconnect has gotten. 2007 disconnect is the answer so let's hope that it doesn't repeat itself for 2017. When you see this type of disconnect, it's also a warning about the human emotion of froth and mania. The bulls are starting to ramp up in a very big way, and we're seeing that in the bull/bears spread, which is now back over 30% (31.1%) for the first time in a very, very long time.


We're seeing the numbers accelerate as time marches on. The bears who were sure things would collapse are now moving in to the bullish camp as are those who were agnostic. They figure why miss out on this market if all it wants to do is move north. Slowly, but very gradually, we're seeing the mentality of things can never go lower. That is true for the short term, no doubt, but it's not great to see the process move towards that fearless level that often calls tops not too far down the road. There's still room for more froth so don't fret bulls, but it is a warning for the future. The bears are giving up on a daily basis, and that's not what you want if you love bull markets forever. We need the bears to hang tough. They're not so we'll likely be adding to that bull/bear spread by the end of this week. If the market hangs tough, we'll likely see readings in the mid 30's by week's end. We get those new readings next Wednesday for action that closes this Friday. The red flag is up. The get-out-of-the-water flag is not. We're working our way up there step by step.

The market is doing what bulls markets always do. It takes bad news and spins in to a lateral move, while waiting for good news to propel it higher. We see bad earnings do absolutely nothing to the down side. The market takes out an individual stock, maybe, but not the market. Even most stocks get graced, but not all of them. It depends on your P/E as exampled by Netflix, Inc. (NFLX) yesterday. Too high P/E to get away with their report. If you have a low P/E, such as International Business Machines Corporation (IBM), you can get away with yet another quarter of declining earnings. They're market is looking for any excuse each and every day to travel upward and protect that S&P 500 2134 breakout. The bulls are doing everything in their power to hold that line, and with the bears stepping away, it's no surprise they're doing the job with little trouble. What the market is saying is it wants higher over time with the usual pullbacks along the way from time to time. Never argue with a market when it comes to price, but be aware that the disconnect is widening almost daily. The higher we go the higher the disconnect.

Just something to keep in the back of your mind.

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.


© 2005-2022 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