Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
Elliott Waves: Your "Rhyme & Reason" to Mainstream Stock Market Opinions - 6th Aug 22
COST OF LIVING CRISIS NIGHTMARE - Expect High INFLATION for whole of this DECADE! - 6th Aug 22
WHY PEAK INFLATION RED HERRING - 5th Aug 22
Recession Is Good for Gold, but a Crisis Would Be Even Better - 5th Aug 22
Stock Market Rallying On Slowly Thinning Air - 5th Aug 22
SILVER’S BAD BREAK - 5th Aug 22
Stock Market Trend Pattren 2022 Forecast Current State - 4th Aug 22
Should We Be Prepared For An Aggressive U.S. Fed In The Future? - 4th Aug 22
Will the S&P 500 Stock Market Index Go the Way of Meme Stocks? - 4th Aug 22
Stock Market Another Upswing Attempt - 4th Aug 22
What is our Real Economic and Financial Prognosis? - 4th Aug 22
The REAL Stocks Bear Market of 2022 - 3rd Aug 22
The ‘Wishful Thinking’ Fed Is Anything But ‘Neutral’ - 3rd Aug 22
Don’t Be Misled by Gold’s Recent Upswing - 3rd Aug 22
Aluminum, Copper, Zinc: The 3 Horsemen of the Upcoming "Econocalypse" - 31st July 22
Gold Stocks’ Rally Autumn 2022 - 31st July 22
US Fed Is Battling Excess Global Capital – Which Is Creating Inflation - 31st July 22
What it's like at a Stocks Bear Market Bottom - 29th July 22
How to lock in a Guaranteed 9.6% return from Uncle Sam With I Bonds - 29th July 22
All You Need to Know About the Increase in Building Insurance Premiums for Flats - 29th July 22
The Challenges on the Horizon for UK Landlords - 29th July 22
The Psychology of Investing in a Stocks Bear Market - 26th July 22
Claiming and Calculating The Research and Development Tax Credit - 26th July 22
Stock Market Bearish Test - 26th July 22
Social Media Tips and Writing an Effective Call to Action - 26th July 22
Has Rishi Sunak Succeeded in Buying His Way Into No 10 - Fake Tory Leadership Contest - 26th July 22
The Psychology of Investing in a Stocks Bear Market - 26th July 22
Claiming and Calculating The Research and Development Tax Credit - 26th July 22
Stock Market Bearish Test - 26th July 22
Social Media Tips and Writing an Effective Call to Action - 26th July 22
Has Rishi Sunak Succeeded in Buying His Way Into No 10 - Fake Tory Leadership Contest - 26th July 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Lateral Trading

Stock-Markets / Stock Index Trading Nov 10, 2009 - 06:06 PM GMT

By: Jack_Steiman

Stock-Markets

When markets get overbought you usually expect a fast drop lower, and that may still, and actually, should take place. However, we are still in a clear up trend off the March lows and this market is trying to fight off those overbought 60-minute time frame charts with all its muscle. Today seemed like the perfect day for some unwinding and although we got a drop, it wasn't very much to get excited about thus we head in to tomorrow still overbought on the short-term time frame charts only.


We started out the day with a small gap down and though the bears tried a few times to sell things off hard, it didn't take too much selling to get the buyers trying to pick up some plays. As the day went on you could see there just weren't enough sellers to really unwind things and get some decent selling. We finished the day mixed. Stocks remain in good bases and patterns overall as today did nothing to hurt those set ups. Bottom line is today did nothing to hurt this bull market we're in. Stubborn bulls even at overbought. The way it is for now.

For bull market to remain just that you need to see strong leadership from the big boys out there. We're seeing that whenever we get some selling. Stocks,such as Apple Inc. (AAPL), Google Inc. (GOOG), Baidu Inc. (BIDU), Goldman Sachs Group Inc. (GS), etc. These heavyweights are leading things higher, but just as important, we are seeing the lower tier stocks join the fun. The advance decline line remains very bullish over the past several months, and that is showing no sign of changing. Even when volume isn't explosive, we're still seeing the majority of stocks move higher while on the selling days, the differential isn't nearly as strong. And as far as volume goes, please remember that volume is only important when you are dealing with major tests of resistance and support. Anything in between is not that meaningful.

Support remains critical at those 50-day exponential moving averages. As long as they hold on any selling the up trend remains solid. 2086 on the Nasdaq, 9752 on the Dow and 1052 on the S&P 500. I don't expect those levels to be broken any time soon. There's now a strong gap not too far underneath each major index to help keep the bears at bay. Again, those gaps do make a huge difference as buyers line up at those levels. The gap ups were gap up and run thus these gaps have major significance in favor of the bulls. With the MACD's starting to turn up on the daily charts from low levels and stochastics crossing bullish, getting too much sustained selling won't be easy at all.

I am getting a lot of emails regarding this market starting to seem like froth all over again. It does feel frothy on the surface of things, but if you look deeper there isn't much, if any at all, at this point. This is why I love to follow the AAII Survey to see how investors are feeling. It is a very reliable indicator. We are seeing a big ramp in bearish emotions. The reason why is simple. We are basing out laterally for almost two months now and after a run up, when the music stops to catch its breath, it makes people feel like things are over with.

That it's. All gloom and doom from here, as most folks have encountered, two massive bear markets in under a decade. Lateral consolidations act as a catalyst to ramp up bearishness and that's healthy for the bullish case. Until I see things get ridiculous on the number of bulls to bears, the market is going to try and maintain a bullish slant. Don't let the talking heads and dooms day forecasters allow you to fall in to their trap. Enjoy the amount of bearishness out there as it is a safety net to some degree. Let the market talk. That's the only thing you should be listening to.

We continue to see great patterns setting up and remain in the two plays. More plays to come once those 60's actually do unwind further.

You don't want to get too involved at overbought thus some exposure is appropriate. Too much is not although weakness can be bought for now.

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 30-Day Trial to SwingTradeOnline.com!

© 2009 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.

Jack Steiman Archive

© 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