Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Selling That Actually Sticks.....

Stock-Markets / Stock Markets 2010 Mar 25, 2010 - 03:36 AM GMT

By: Jack_Steiman

Stock-Markets

That's a nice change of pace for once. This market needed some selling and finally got it. There were many times during the day when it seemed the market would try and go green, but for once it didn't happen, and I for one am glad it didn't. There comes a point, even if you're bullish, where you want some selling to unwind those overbought oscillators. In the back of your mind you know that the longer we go without unwinding some, the harder things will come down when it snaps. With today's selling the daily charts are now only borderline overbought while the 60-minute time frame charts are now a little more than halfway unwound from the top. It doesn't take too much selling for them to unwind some.


I can only hope we get additional selling before the market try's to move higher once again. The deeper we fall initially to unwind things, the better the opportunity for decently higher prices. Another day or so of selling would unwind things enough to be set up to move higher once again. If we move up from here then the move higher will likely be very limited thus even if you're a bull it’s best to get lower first and know that if you're in good stocks they'll hold up well anyway.

Let's talk about the market and stocks. I can tell you the easy money has been made. That doesn't mean we aren't going higher as I believe we are going to move up again, but the move up is getting mature. The MACD's are now compressed top side instead of coming off the bottom. The RSI's are stretched as are the stochastics. The best of this rally has passed so now it becomes a very stock specific environment.

You need to buy the best set ups and make sure you don't buy them at overbought. You could get away with that a bit easier many weeks back but now it's tougher. You need to buy strong handles with a clearly defined range that can ultimately make another strong move up. Yes, you have to deal with a handles whipsaw but that's the best way to buy stocks now. That or stocks testing back to their 50-day exponential moving averages and if possible, gap support just under that. There aren't that many stocks testing back to their 50's right now because most stocks are extended but those plays do exist for sure. The handle set ups are everywhere. These handles tell me this bull run isn't quite over yet. I do want to make it clear that things are tougher now, and with that being the case, you can't just haphazardly buy just about anything and expect immediate gratification.

The sentiment numbers are not at extremes yet but they are creeping up slowly but surely. A nice jump up in bullishness this week. We saw the bull-bear spread move up to 28.4% more bulls this week and although it's not at extremes, you can see the retail buyer is jumping in now due to the fact that they've missed this bull market. Just two weeks ago we were near 20% and now we're closing in on 30%. We all know that once you get to 35% or more, you can forget the bull market. At the very least a strong pullback is coming. We're getting closer but still not in dangerous territory. This needs to be monitored very closely and you know I will do that.

The PowerShares DB US Dollar Index Bullish (UUP), the proxy for the dollar, has move up to 24.05 with a measurement of 24.25/24.50. It's been a long run up for the dollar but the connection of the dollar and market has waned lately. Commodities are affected still but mostly only in the areas of SPDR Gold Shares (GLD) and iShares Silver Trust (SLV). The overall market is ignoring the dollars rise and that's been a nice change of character for the bulls and a big disappointment for the bears. The move in the dollar is nearing completion but can run a bit more. It will be interesting to see if it can start to adversely affect the market. I don't think it will any longer. I think any major selling comes from overbought and too much bullishness.

Markets run through phases. Most phases are higher, but when they go lower, they go lower a lot faster than they rise thus timing the tops of a run is very important to successful overall trading. I don't get the feeling that we've seen the top yet. A run to 1200 S&P 500, or thereabouts, is possible but I don't think we're close to thinking long-term here. I don't think we'll come close to the old highs at S&P 500 1576 although I am open to all possibilities. If the market signal says that's where we're going I will go along for the ride. My instincts say that won't happen, but I won't let that instinct interfere with what I see set up. We always take it one day at a time and thus each day brings new insights. We'll learn as we go.

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!

© 2010 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.


© 2005-2022 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