Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Surges On Overseas News...

Stock-Markets / Stock Markets 2011 Mar 22, 2011 - 02:09 AM GMT

By: Jack_Steiman


A great day for the market today as very good news out of Libya sent the futures rocking higher. Democracy is close at hand. The way it should be, of course. Equal rights for everyone. Autocratic rule about to be replaced, and that's what that country needs in the very worst way. It looks like that's coming to a head with Khadafy on his way out shortly.

News out of Japan wasn't so bad either, and thus, the stock market opened with a strong gap up and all the indexes performing well. Good to see all of them moving together in harmony, and not bifurcating, as the Nasdaq has done so well lately. It was a smooth move higher all day that started to stall the moment the S&P 500 hit its 20-day exponential moving average, currently at 1299. It hit 1300, and started to back off, but held above 1293 where the 50-day exponential moving average is now, but no thrust to be sure. The Nasdaq remains well below its 50-day exponential moving average at 2714. It would be bullish if we could get the Nasdaq to join the S&P 500 and Dow above the 50-day exponential moving average. It's not bearish that the Nasdaq is trading weaker than the S&P 500, but it would be better if it led and wasn't dragged up by the S&P 500. You want to see higher risk out there, but for now, we can say with certainty that today's action took the S&P 500 back above resistance, although barely, with the Nasdaq trying to play catch up, however, it was showing decent action.

A solid advance-decline line added to the solid action, and this is important on days like today when an index, or more than one index, breaks back above key resistance. The sellers were kept down and overwhelmed, so in the end we can say today is what can happen when the bigger trend remains higher. There is still nothing out there suggesting the bull market has ended bigger picture, but I'm always open to all possibilities. Today said to remain bullish bigger picture for now.

Weakness managed to show itself in those bank stocks again folks. The KBW Bank Index (BKX), or proxy for those bank stocks, flashed a long, bearish tail off the back test of its 50-day exponential moving average. It's not necessarily a death blow, but the banks and financials have been the weakest area of this entire bull market, which we all know led the most recent bear market. If the KBW Bank Index can break above its 50-day exponential moving average at 52.56, that would be very bullish for this market, especially on a closing basis. It closed at 52.01 today after testing above that.

Many other areas are breaking back above without a fight, while other areas are less successful on their back tests. Few failed with such a long tail the way the banks did today, and this remains a sore spot for the market. Although few will argue that the market has been able to ignore the overall weakness in this sector. However, if the banks can break above resistance at 52.56 on a closing basis, it would boost this market in a huge way. So watch for that in the days ahead.

To show you the weakness in this sector, Citigroup, Inc. (C) announced a sadly needed 10/1 reverse split in the weeks ahead so as to be able to get their stock at higher levels, even though you get only 1 share for every 10 you owned once it takes place. Reverse splits are a measure of desperation. Not good to see, but fits in perfectly with the longer-term headaches this sector of the market has had to endure.

We like to follow the iPath S&P 500 VIX Short-Term Futures ETN (VXX) to see what direction the market may want to be taking for the short-term. The VXX was trading in a base triangle that broke down below support today. A clean break of the triangle. This break suggests, but never guarantees, a move lower, which would portend higher prices of some kind for the overall stock market. There are outside influences which could make it a false breakdown, such as Libya and Japan. But you have to respect this type of break, which suggests lower prices for the VXX, and thus, higher prices for the market. Doesn't mean up for the market every day. Not by any means. It means up overall as long as the breakdown holds. It'll be interesting to follow in the days ahead.

There is one problem facing the market here. The recent highs on the Dow and S&P 500 at 12,391 and 1344, respectively, may be tested here and exceeded. No guarantee, but the action suggests this is a realistic situation. If it does happen we will be facing massive negative divergences on the weekly charts on all the major index charts. Never a good thing to flash negative divergences on those weekly charts as that usually ends quite badly for the short- and medium-term with, at minimal, a major pullback of well over 10%. It would be best for this market to handle out for a while longer to let those oscillators set up differently. I don't know if we'll get that to happen, unfortunately. We could exceed the old highs by a few percent on those divergences, but then there's a nasty price to pay. For now, all we can do is watch and see how things play out. Daily negative divergences are bad enough to deal with, but when you flash big negative divergences on the weekly charts, that's simply not good for a while. And you need to be prepared for that if it takes place. No worries yet. Let's just watch and see how things unfold.

For now we're fine. We watch to see how the daily charts set up and keep some long exposure. I don't think it's wise to get overly involved as world news is hitting daily on some very sensitive subjects. Some exposure is fine. 1299 is big resistance for the S&P 500 to get through, or the 20-day exponential moving average, while 2714 is key for the Nasdaq or its 50-day exponential moving average. A day at a time.



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!

© 2011

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