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
How to Trade Binance Vanilla Options for the First Time on Bitcoin Crypto's - 2nd Aug 21
From vaccine inequality to economic apartheid - 2nd Aug 21
Stock Market Intermediate Top Reached - 2nd Aug 21
Gold at a Crossroads of Hawkish Fed and High Inflation - 2nd Aug 21
Bitcoin, Crypto Market Black Swans from Google to Obsolescence - 1st Aug 21
Gold Stocks Autumn Rally - 1st Aug 21
Earn Upto 6% Interest Rate on USD Cash Deposits with Binance Crypto Exchange USDC amd BUSD - 1st Aug 21
Vuze XR VR 3D Camera Takes Near 2 Minutes to Turn On, Buggy Firmware - 1st Aug 21
Sun EXPLODES! Goes SuperNova! Will Any planets Survive? Jupiter? Pluto? - 1st Aug 21
USDT is 9-11 for Central Banks the Bitcoin Black Swan - Tether Un-Stable Coin Ponzi Schemes! - 30th Jul 21
Behavior of Inflation and US Treasury Bond Yields Seems… Contradictory - 30th Jul 21
Gold and Silver Precious Metals Technical Analysis - 30th Jul 21
The Inadvertent Debt/Inflation Trap – Is It Time for the Stock Market To Face The Music? - 30th Jul 21
Fed Stocks Nothingburger, Dollar Lower, Focus on GDP, PCE - 30th Jul 21
Reverse REPO Market Brewing Financial Crisis Black Swan Danger - 29th Jul 21
Next Time You See "4 Times as Many Stock Market Bulls as There Are Bears," Remember This - 29th Jul 21
USDX: More Sideways Trading Ahead? - 29th Jul 21
WEALTH INEQUALITY WASN'T BY HAPPENSTANCE! - 29th Jul 21
Waiting On Silver - 29th Jul 21
Showdown: Paper vs. Physical Markets - 29th Jul 21
New set of Priorities needed for Unstoppable Global Warming - 29th Jul 21
The US Dollar is the Driver of the Gold & Silver Sectors - 28th Jul 21
Fed: Murderer of Markets and the Middle Class - 28th Jul 21
Gold And Silver – Which Will Have An Explosive Price Rally And Which Will Have A Sustained One? - 28th Jul 21
I Guess The Stock Market Does Not Fear Covid - So Should You? - 28th Jul 21
Eight Do’s and Don’ts For Options Traders - 28th Jul 21
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Edging Higher...Resistance Right Here ...VIX Low

Stock-Markets / Stock Markets 2012 Jan 21, 2012 - 12:08 PM GMT

By: Jack_Steiman

Stock-Markets

The market is losing its volatility as the VIX drops, and that's not a bad thing. Nice and smooth is how the market is now trading. No major swings. No intense whipsaw. That's a welcome reality for all traders. The worst of times come when the market just flip flops all over the place, haphazardly, without much rhyme or reason. When the VIX starts soaring, it's lights out for this market in terms of performance. It becomes almost impossible to play. Many hundreds of points up and down in a single day on the Dow. With the VIX near 20, we don't have to fear the market. We know things will be tight, and thus, trading becomes more enjoyable. A strong market helps bring the VIX down, and that's why it's so low, although the market has not made the big breakout to this point. It has moved up decently, but yet to make the big one a reality. More on that later.



For now, we see a market that's trending higher, and seemingly wants to make the breakout over 1320 S&P 500 in time, but we can't get aggressive until we see it take place, and hopefully, with a strong gap up above. It feels like it'll happen, but you don't get aggressive on feel. You get aggressive only when you see the move, and it happens with all the necessary ingredients, such as volume, etc. A low VIX. An up trending market. Good internals, but no breakout, yet, so, we wait and see if, and when, it'll finally happen.

So, what's the fly in the ointment short-term? It's the overbought nature of the major index charts. Not all of them are at 70 RSI's, but they are very close, and thus, you know a pullback will have to hit one of these days soon. In strong markets, however, you can stay overbought longer than you'd think possible. The RSI's could always stay above 70 for a week or so. It does happen, but it doesn't have to happen so caution is the key for now. Exposure is fine, but too much is not. The degree of the pullback, when it comes, is difficult to understand. We're in a more favorable market, but you can't rule out as much as a 5% pullback across the board.

I've seen 5% pullbacks, and I've seen as little as 2%. You simply watch the short- and mid -term oscillators to gain greater insight as to how much we should expect when it actually does hit. Outside of the overbought conditions, there's little to get upset about if you're bullish. The oscillators aren't bad at all. The internals are fine. The action is clearly more bullish, and the earnings have been pretty good overall, with the usual number of mishaps along the way. In time, I think it's possible to break out, but we shall see. The overall suggests it's a real possibility, once we can unwind things a bit.

Markets can explode when they clear long-term down trend lines. That level on the S&P 500 is at 1320. Within a few points of it, but let's call it 1320 to have a nice round number to work with. The bears will be forced to cover quickly as new money will come in off the sidelines should this take place. The bears will be overwhelmed. They will have no choice but to run for the buy-back button. This extra fuel is what ignites strong rallies, once a critical level is taken over by one side or the other. Below 1320 the bears can still feel they're in the game and have hope, even though the market has gone against them, thus far, for the past few weeks.

We can make arguments for, and against, why this market should, or should not, break out, but the point is that it doesn't matter. Price action talks, and how those oscillators follow, talk even more, and for now, they're favorable, whether it's warranted or not. Maybe, in time, the market will fail miserably at 1320, and the bears will be vindicated for their gloomy outlook. We can all reasonably understand why they feel as they do. For now, the action says watch 1320 for the breakout, while 1267 should hold back all selling.

The earnings parade continues in a big way next week, and thus, we'll learn more about the health of our economy. There have been some huge misses early on in this earnings season; Google Inc. (GOOG), Capital One Financial (COF), and Parker-Hannifin (PH) to name just a few. There have been some great surprises. F5 Networks, Inc. (FFIV), International Business Machines Corp. (IBM), Bank of America (BAC), and others come to mind. The market, ultimately, moves on earnings. Not on what has taken place, but on what the market perceives will take place in the coming months.

It seems as if the message of the market is such that it expects things to remain pretty good for the next few months, at least. Only Europe hangs over us in a negative fashion. If that ever got resolved, this market would explode higher. Only time will tell that tale. For now, the market seems more concerned about the progress of earnings being made by the leading companies in the United States. It seems to like what it sees, so, who am I to argue with it?

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 21-Day Trial to SwingTradeOnline.com!

© 2012 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.


© 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