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Stock Market Grinding Higher...

Stock-Markets / Stock Index Trading Nov 26, 2009 - 01:58 AM GMT

By: Jack_Steiman

Stock-Markets

The market got some very good and unexpected news on jobless claims this morning coming in at 466,000 versus expectations near 500,000. There was also the Report on Durable Goods that wasn't nearly as positive. The market popped initially on the Claims Report but pulled back thereafter. There was a small gap up once we opened. The rest of the day was spent in a small trading range. One that grinded higher throughout but in very tiny bursts. We closed right on 1110 resistance. Good action for what's known to be a retail day higher for the market.


Friday is usually the same thus a breach of 1110 is very possible with a move as high as 1120 or a 50% bear market retrace level quite possible off the March lows. Friday will be quiet since it’s a half day thus don't take anything out of it either way would be my recommendation.

The banks continue to be very weak as the market grinds higher. Goldman Sachs Group (GS) has broken down and JP Morgan Chase & Co. (JPM) is right on the cusp of doing the same. Not great news for the market but what resiliency the market is indeed showing by moving north in the face of such weakness to leading stocks. That has to be considered an overall positive because soon these stocks will get oversold on their daily charts. GS only 4$ away from massive gap support at 165. Other areas of the market continue to pick up the slack and that is really good news.

The daily charts continue to put in negative divergences and those divergences continue to get ignored. How long will that last? You have to see the reversal stick off a gap up to know when the party is over and it needs to be on distributive volume or heavy volume to say it where everyone can understand. We just haven't seen that and it's financial suicide to play it before it happens as many have for months only to see their portfolios get annihilated. An up trend is just that until you see it get broken technically. Each day feels like the end but we aren't seeing the necessary evidence to say it's here yet. Stay with the overall trend until it breaks on the necessary reversal volume and, like I said earlier, preferably off a gap up.

The market remains on a buy signal until we lose the 50-day exponential moving averages on the three major index charts. The Dow, S&P 500 and Nasdaq. Those levels are S&P 500 1069. On the Nasdaq the number is 2117 and on the Dow is level is 9976. In addition, there is gap support and horizontal price support all over the place making the case for the bears a most difficult one for sure. Gap support on the Nasdaq in two places, 2150 and 2128, both in front of the rising 50-day exponential moving average. The S&P 500 has gap support at 1078, also in front of the 50's. Price support is at 1087. You get the idea. The bulls have a lot going for them on any pullback. Stay with the trend but play lightly up here at overbought on the daily charts along with resistance directly ahead. Long is the only way or cash for now.


Happy Thanksgiving. Enjoy life. Don't drink and drive. Play with a child if you're fortunate enough to be around one. Talk about a dose of beautiful reality. Spend time with a small child and you'll learn about what's really important in life. It's not the stock market my friends. Enjoy!!

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.

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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.

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