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 Six Week Lateral Base In Place......

Stock-Markets / Stock Index Trading Nov 14, 2009 - 08:56 AM GMT

By: Jack_Steiman

Stock-Markets

Best Financial Markets Analysis ArticleWe get towards the top of our 6-week lateral bases and it looks like we'll finally break out. It's the exact same story as when we get towards the bottom of our existing bases. Breakdown looks inevitable. It gets very emotional at both ends because the consequences of a breakout or breakdown are large. The market is likely to have quite a large move once we get a decisive break and thus the emotions get intense. The only problem is, neither side is getting what they want, and there's a good reason for that. There is a lot of good news from both the economic and earnings front. That's the bullish case.


However, there has been a tremendous run up over the previous months before this lateral consolidation or range-bound market took hold. This keeps the market more in pause mode. We can't really break it down because of the good news out there, but we can't break it out because of the tired and mature nature of the move off the lows. We have a market, instead, that's catching its wind. Bottom line is, we're moving sideways, and that may be the case a lot longer than anyone would like. That's the market’s job. To frustrate and make things tough.

Get everyone to do something they know they shouldn't, but can't help themselves from doing. That is, to buy too much, or short too much, out of boredom. Lateral markets are the absolute worst nightmare for traders. Once a trend is over, traders want more and more. They don't get it, so they play more to try and "make up" for what they feel they're missing. If you play more heavily, the whipsaw will force you out of plays one by one. There's no way around it. In lateral bases, light and slow is the ONLY way.

The one thing that makes this particular market extremely tough is the way money is moving around from place to place. The big money plays the financials one day and then sells it. They then run to the transports, retail, etc. All over the place. One day to the next often doesn't seem to make sense or follow a particular pattern apparently in place. Ultimately, the pattern does play out, but from a long and winding road. It plays havoc on emotions. This is yet another reason not to get aggressive in these types of markets. In an up trending or down trending market you don't see this type of behavior. It's far more consistent. A market being consistent is what makes traders happy.

The MACD's on the 60-minute charts still aren't looking ready for sustained upside action. It looks as if some type of test lower will be necessary for this market to get ready for something more sustainable to the up side. On this move up today we didn't see any impulsion from those short-term chart MACD's. That's good in a way in that it will allow, or should allow, for more down side which will only help to bering the oscillators lower, not only on the short-term time frame charts, but on the daily charts as well. The daily MACD's are still crossed bullish on the daily charts and from or at below the zero line. That normally plays out well for the bulls over time, but, of course, we don't know that for sure yet.

The key in terms of longer term health is for the indexes, the major indexes, to hold on to their 50-day exponential moving averages on a hold. A small breach isn't a problem but a close below with force would signal there's trouble. The numbers are 1056 on the S&P 500, 2094 on the Nasdaq and 9812 on the Dow. Anything in terms of selling above those levels is simply noise that can be bought. Just remember those levels and trade accordingly. If we close 1% or more below those levels on ALL 3 major indexes, there's trouble ahead for the bulls. Simple as that.

Sentiment:

This continues to be very favorable for the bulls as the bears continue to rock in. The AII survey says that bulls are lagging bears and that's a positive that can't be denied. As long as that holds up we should see all pullbacks get bought up because there are enough shorts covering to give the market fuel.
Sector Watch:

Strong move in most Sectors this week. The Aerospace, Chemical, Pharma, Restaurant, Retail and Technology areas were quite strong this week. Consumer Electronics were weak and the Financials and Oil areas were mostly flat. Gold continues to ascend out of its base and the US Dollar remained under pressure falling hard Friday. As long as the Dollar continues to erode, look for equities to hold up in our bases with our bias for an upside move in time. Most foreign country ETF's continue to show good price action. The Shanghai/China market, after forming a Handle, is at a very important pivot seen in our 5th chart below. We've included a snapshot of the German DAX seen in our 6th chart below.

See all of today’s charts at SwingTradeOnline: COMP (Nasdaq Daily), SPX (S&P 500 Daily & Weekly), WLSH (Wilshire 5000 Daily), DAX (German DAX).

The Week Ahead:

We will see the market most likely stay in its newly defined range with the bulls trying to protect any pullback towards the 50-day exponential moving averages and the bears defending any move towards the 1101 area. It's just that time folks. Time to keep it very light.

The market will make its intentions known in time.

Slow and easy.

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