A reversal to the reversal. Why not. When all seemed ripe for big selling we didn't see any today, although we tried early on for sure. A small gap down that had a chance to at least run somewhat lower. No large gap down suggested today wouldn't be terrible, which I spoke about early on in the morning update, but there was hope that we could move lower throughout the day. It just didn't happen. Why? Hard to say other than the usual. Folks are still looking to buy when there's some decent weakness, and in this market, weakness is about 1% lower.

It is mind numbing to be sure, but that's the mantra of this market now, and that's the way it has been for quite some time. Yesterday was very promising for the bears. A strong reversal down after a failed breakout. This is almost guaranteed to be the top, and it may be, but you have to be impressed with what the bulls were able to do today in the face of what seemed like the end of the run higher for a while to come. It may still be, but today didn't give any evidence to that becoming a reality any time soon. The next few days will be very interesting and very important technically.

Even more bad GDP news early this morning pre-market couldn't get the big gap down going. A big negative number. It is so bizarre but true that the worse the economy is the better the market is simply due to rates. It is crazy for sure, but that's how the market is trading. A strong economy will be the end of the bull market, so as they say, be careful what you wish for. Of course, we all want a strong market, because that's what's best for the masses, but as long as the economy is struggling the market will remain elevated. A correction will occur, but that doesn't mean a bear market is upon us. Weak economic news, or, at worst, okay economic news is good for the market. Only a surging economy will end the bull-run.

Froth remains out of control as the bull-bear spread, once again, was well over 40%. 43.9% to be exact. The tiniest of a move lower, but still in total sell territory. What it will take to get that big gap down is beyond my understanding, and probably everyone else's as well. There is one interesting things going on here though. There was a strong spike in put buying on the S&P 500 today, meaning folks are now expecting a move down in the market. A hard move at that. Maybe that belief will continue to hold things up. Once again, folks, front running, which hasn't paid off at all. Maybe it will this time, but the opposite action took place today versus what the retail trader was doing in terms of a bet on the short-term market direction. Nothing has changed. Nothing at all. The market is still well above support at 4186 on the S&P 500. Only when that level goes away will we have trouble ahead for the bulls.

Keep it light. Keep stops tight. Avoid massive froth and you'll survive it all quite well.

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.

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.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.