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

Stock Market Bulls Hold The Line, For Now

Stock-Markets / US Stock Markets Jan 17, 2009 - 02:06 PM GMT

By: Kingsley_Anderson

Stock-Markets Best Financial Markets Analysis ArticleIt looks like the other shoe dropped this week. Just when everyone thought that we may have heard the last of the financial sector's woes, more bad news hit the wires. The question is how many more shoes are left?


For a time, the market shrugged off negative news. Starting last week though, the market was oversold and there was just too much negative news from the banks for it to ignore. For the time being, the bulls have held the line. Although there is still strong evidence to indicate a market bottom was established in November , that does not mean one should stay married to that opinion should conditions change.

The question that is constantly asked is “will there be a retest of the November lows?” The breaking of support this past week on all of the major indexes (8500 on the DJIA, 850 on the S&P 500, and 1500 on the NASDAQ) makes that more event more likely. However, all three also bounced back off support Thursday on noticeably higher volume- a slightly reassuring development

Past studies of bear markets tells us an actual touching or undercutting of the November lows is not absolutely necessary. Some have pointed out the possible formation of an inverted head and shoulders pattern developing on the S&P, Dow Jones, and the NASDAQ. While this may ultimately occur, at this point it is mere fanciful thinking. The pattern would not be complete until the neckline is breached (see the charts below). Until that occurs, anticipating the move is a pure gamble.

The price action on Friday was also questionable. The candles formed by the DJIA, S&P 500 and NASDAQ (I will not bore anyone with the names of the particular candlesticks) demonstrates that buyers' hearts are not into this recent reversal. Indecisiveness was further punctuated on the NASDAQ by the failure to pierce the 50 day moving average.

As can be imagined, there was a dramatic rise on the “Fear Index,” a.k.a. the VIX. It cut through resistance at 45 and has now backed off after running into resistance in the 55 area. If the indexes do recede below the November lows, investors should look to see if the VIX can make a higher high. If it fails to do so, a positive divergence will have occurred- a positive sign for the bulls. If a higher high is made on the VIX, things could get really ugly.

When analyzing the markets, do not get too wrapped up in the headlines. Remember, bull markets do not begin when the analysts raise their price targets higher and higher, and the newspapers trumpet the beginning of “a new age in prosperity.” By the time the economy is firing on all cylinders and everything is great, the market will be ready to top. This time, just like all the other times, the market will rise before the economy improves. Keep this in mind that when the market finally begins to move.

Hopefully, the market will sort itself within the next two weeks. Studies that indicate that “as January goes, so goes the rest of the year.” Last year was a prime example of a down January resulting in a bad year for the bulls. Once again, caution is advised.

By Kingsley Anderson

http://tradethebreakout.blogspot.com

Kingsley Anderson (pseudonym) is a long-time individual trader. When not analyzing stocks, he is an attorney at a large law firm. Prior to entering private practice, he served as a judge advocate in the U.S. Army for five years and continues to serve in the U.S. Army Reserves. Kingsley primarily relies on technical analysis to decipher the markets.
Kingsley's website is Trade The Breakout (http://tradethebreakout.blogspot.com)

© 2009 Copyright Kingsley Anderson - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Kingsley Anderson Archive

© 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