Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Goes Splat...

Stock-Markets / Stock Index Trading Feb 05, 2010 - 01:59 AM GMT

By: Jack_Steiman


Best Financial Markets Analysis ArticleThere are many words which could describe today's action but I think splat says it best. Clear, concise and to the point. It felt like splat for the bulls without question. The Nasdaq over the past three days wasn't very good but the Dow and S&P 500 printed some very nice candles with small inside sticks printed yesterday suggesting things would move higher today ahead of tomorrow's Jobs Report, which is huge to say the least. Instead, this morning we got bad news from many overseas company's about debt on their balance sheets. Headaches that are more than a bit serious. No liquidity. Not good.

The futures cratered down over night with the dollar soaring skyward. We gapped down and never looked back. The usual quick attempt back up early on but the bears jumped on this overseas opportunity. Down we went throughout the day. We stayed oversold on all the short-term charts. No real rally once things got rocking down. We closed on the lows. The Dow actually trading a hair below 10,000 before closing at 10,002. Volume was heavy enough but not capitulatory. Bad news for the bulls on that front. Bottom line is today was technically very damaging and I will discuss that shortly in this report. A total knockout by the bears.

We had our first breakdown out of a bear flag a week ago plus and from that point the market got oversold on the daily charts and started to move back up. As I had mentioned, some very good looking sticks on the S&P 500 and Dow charts. We closed just below those 20- and 50-day exponential moving averages and thus the battle lines were drawn. Would the bears take it back down or would the bulls bust us back through those lost moving averages? The bears said you are not getting back though those 20's and 50's and down we went. It's important to understand what this truly means.

For now it tells us that the first breakdown below the 20's and 50's had a follow through big time to the down side once it back tested. That's classic bearish action. You can't identify bearish action until you get a back test and how it's handled by both sides. The key here is not that the bulls failed on this back test. The real gem for the bears is how hard they sold things off with relative ease once we got this back test move. They left no doubt as to what their intentions were. They seized control and took the bulls down to their knees. The market is now truly broken. No question about that whatsoever. Can the market just spring back? No, not unless there's news out there that no one knows about at this time. We had breakdown, back test and massive failure. That's bearish. It doesn't mean bear market but it means the down trend is for real and thus we must all adapt to this reality or pay the price in a big way.

There's one chart and it's a big time leader in the financial world. Everyone should take a look at it tonight to show you the power of this move today and the implication it has for this market. MasterCard (MA) was slaughtered. The type of breakdown stick on massive volume that tells you it has seen its top for months, if not longer. Maybe lots longer. MA is just one of many stocks that look like this. CME Group (CME) joins that crowd. Google (GOOG) engulfed yesterday's nice move higher. The list is deep. The action in leader after leader tells me that this market will be struggling for some time to come.

The market has been no fun for many for over a decade now with many bear markets in that small time frame. I'm not saying we're in a bear although we could be. What I will say is that things will be very tough here. Quite difficult for the bulls. For those who cherish up, up and more up, those days are over for now. Global debt headaches are in control. The up trend is over. A down trend is in place. Adjust your investing accordingly. Again, I will remind you that this could last a long time or just some weeks to months. We can only take things one day at a time on that front. In this moment, the market is in a down trend confirmed.

Today's stick on the Dow and S&P 500 engulfed the entire move off the back test. MA, mentioned above, took out 3 1/2 months of gains in one day. These types of engulfing sticks are yet another reason to be protective of your investments here. Very scary sticks wiping out huge gains in a very short period of time. There is extreme risk in holding stocks in to their earnings reports. Keep that in mind. Engulfing sticks mean that one day at the very least took out the previous days gains if not many more days such as I just showed you. Engulfing sticks only usually occur when markets are confirming down trends and can do an incredible amount of damage in a very short period of time. They often take place on much heavier volume than when upside was being printed. Volume on these engulfing sticks confirms price action and on that front there is little doubt about these sticks being the real deal. Much heavier volume to the down side is what I'm seeing everywhere I look.

The dollar continued to explode higher today and that took the commodity stocks down hard. Very hard to be more accurate. When the PowerShares DB US Dollar Index Bullish (UUP) broke through 23.20, it too, back tested a few days ago but held that breakout and up it went taking the commodity world down with it. The market is following right along. Make no mistake though that the commodity world takes the biggest hit when the dollar rocks higher and the losses there are astonishing since the UUP broke out. It measures up to about 24.25 if the full pattern plays out.

Look folks, bottom line is that we're in a confirmed down trend. No one on planet earth knows how bad this will or won't get. All we know for sure is the down trend is confirmed now with these engulfing sticks today. It tells us to be staying away from longs. There will be very nice rallies that can be played only when the daily charts get 30 or likely even sub-30 RSI’s with stochastics below 10. At the same time the 60-minute charts will also need to show these types of grossly oversold readings. You'll get your 1-3 day moves higher off of these readings but you'll have to part ways quickly with any longs. We missed this intense move lower so now shorts will only come from higher oscillator readings. I won't short RSI’s in the low 30's such as we have now even though we can certainly go lower. Stochastics are just too low as well. Expect your bounces but now the top of today's gap downs are going to be massive resistance. On the SPY the level is 109.03. On the Nasdaq it's 2178. Just know that things are not good with the market and protect yourselves accordingly.



Jack Steiman is author of ( ). Former columnist for, 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 21-Day Trial to!

© 2010

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.

© 2005-2019 - 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