Stock Market Breaking Out A Bit...

Stock-Markets / Stock Markets 2016 Apr 14, 2016 - 10:34 AM GMT

It wasn't the biggest, most forceful breakout above trend-line resistance I've ever seen, but it was a breakout and should be treated as such unless we immediately lose it back tomorrow. I know that seems unlikely, but this is the stock market, and all possibilities need to be respected. If the breakout had been more forceful then I wouldn't be talking about losing the move up, but it was fairly tepid, so we keep it in the back of our minds.

A breakout, but with respect, if you understand that type of thinking. You don't want to get complacent when things break out without the big bang behind it. Good, but not great, is how I'd say it. The bulls finally cleared trend-line resistance, and that's good news if you're dreaming about the possibilities of new highs above 2134 on the S&P 500. No guarantee it will occur, but the move today surely gives the bulls a far better chance.

The moves up had been stopped over and over either at, or somewhat below, the trend-line resistance number. So today was a new, positive accomplishment for the bulls. They can celebrate for sure. Wine, not hard liquor. The market gapped up out of the gate and never looked back. The failure by the bears a few days back to follow through on consecutive topping candles opened the door for the bulls to step in and get the job down, and that's exactly what they did today. The gap up took out the first resistance number at 2067, and then the dirtier deed was taken care of. A solid day, for sure, and now the bears have to gather up and try to pull out a miracle tomorrow. Each and every day we stay above the trend line, which is now support, the bulls will get braver and braver and try to make the bears cover yet more of their short positions. Final analysis is simple. Home run for the bulls today. Striking out for the bears is their continued story after nearly seven years of this endless bull market.

The S&P 500 has next resistance at 2104 followed by 2116. Once 2116 is cleared it's off to the races at 2134. At 2134 the market will be met with negative divergences on both the daily charts, which now already exist, and the monthly index charts. What, bulls worry? No. That said, I have to tell all of you that these things do and will exist. The daily charts are already flashing decent negative divergences, while the monthly charts will be official at 2134, but they're already so bad that printing 2134 makes it a mere formality. The fed market seems capable of overcoming them, but all I have to say is that I've never seen worse ones, thus, I feel the need to put it out there to everyone that they exist, but do with that information what you will. I wouldn't get too complacent I guess is my point. I've been in this business way too long and they are the worst I've ever seen so I feel compelled to at least mention it. If I don't then I too have become too complacent, and I just can't do that and feel good about my work. So again, the fed market will probably make them a non-issue, but keep it in the back of your minds, so at least you know what is out there.

The market is acting as if it knows exactly what Yellen intends on doing with rates as the year moves along. It's telling us it doesn't believe that she will raise any further. Maybe one, but definitely nothing on the aggressive front. I personally believe she's done for the year. 20% chance she does one but definitely no more than that. The market is making sure the masses stay in. Low rates are the number one way to accomplish that goal. The fed has created a monster, and she intends to keep it that way, until at least the elections end in January of next year. The fed wanted inflation through the stock market since she knew there was no way to get through the actual economy away from the stock market. She has succeeded. Her actions will probably keep the bull going a while longer. Mission accomplished!

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.

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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