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
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan
Gold Price Back Below $1,800! - 10th Sep 21
The Inflation/Deflation debate wears on… - 10th Sep 21
Silver Price seen tracking Copper prices higher - 10th Sep 21
The Pitfalls of Not Using a Solicitor for Your Divorce - 10th Sep 21
Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
This Boom-Bust Cycle in US Home Ownership Should Give Home Shoppers Pause - 9th Sep 21
Stock Market September Smackdown Coming Next? - 9th Sep 21 - Monica_Kingsley
Crazy Crypto Markets How to Buy Bitcoin, Litecoin for Half Market Price and Sell for TRIPLE! - 8th Sep 21
Sun Sea and Sand UK Holidays 2021, Scarborough in VR 180 3D! - 8th Sep 21
Bitcoin BTC Price Detailed Trend Forecast Into End 2021 - 8th Sep 21
Hyper Growth Stocks - This billionaire is now using one of our top strategies - 8th Sep 21
6 common trading mistakes to avoid at all costs - 8th Sep 21
US Dollar Upswing, S&P 500 and Nasdaq Outlook - 7th Sep 21
Dovish Assassins of the USD Index - 7th Sep 21
Weak August Payrolls: Why We Should Care - 7th Sep 21
A Mixed Stock Market - Still - 6th Sep 21
Energy Metals Build Momentum; Silver & Platinum May Follow - 6th Sep 21
What‘s Not to Love About Crypto Market Fireworks - 6th Sep 21
Surging US Home Prices and Gold – What’s the Link? - 6th Sep 21
S&P 500 Rallies To New All-Time Highs – Are The Markets About To Break Higher? - 5th Sep 21
Bond Conundrum - Boom or Bust for Gold? - 5th Sep 21
How the sale of a Sting CD sparked an Entire Online Industry - 5th Sep 21
Three Years of Fresh Thinking With Scott Dylan and Dave Antrobus - 5th Sep 21
Bitcoin Bear Market Trend Forecast 2021 and Model Crypto Portfolio Buying Levels - 4th Sep 21
The Most Actively Traded Companies on the Toronto Stock Exchange - 4th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Bears In Full Control....

Stock-Markets / Stock Markets 2010 Jul 03, 2010 - 05:49 AM GMT

By: Jack_Steiman

Stock-Markets

It's a rare time indeed when the major daily index charts stay oversold. When RSI's hit 30 and stochastic's hit 7 across the board and we go lower you know you're in a bear market. This is what we dealt with today. Extremely oversold on the daily charts, not the 60-minute charts but the daily charts. That indeed unusual except when you're in a truly bearish scenario. After today's action I think it's pretty clear to all that things are in bad shape from both a fundamental and a technical perspective. The futures were flat going in to the big jobs report. Everyone was anticipating something good to come out of left field to help the bullish case come alive once again. They didn't get it. The numbers were not good. The private sector was anticipating job creation to the tune of 100k. Instead it got 83k. The unemployment level fell to 9.5%.


Sounds good but it actuality it was bad news because it was discovered this came from a large number of folks who stopped looking for jobs altogether. They simply gave up and left the work force. No interviews. No jobs. Nothing! The futures initially shot up only to have them come back basically to flat. We opened a drop higher but that didn't last long at all. The market started a slow but steady move to the red side of the ledger sheet. In the end it was just another day in the down trend with the entire day spent at oversold with risk 30 or less. Unusual over the past many weeks, even as we headed down off the top. This time, as we are below 1040 S&P 500, the oversold conditions didn't kick in. Another strong and commanding day for the bears.

Now remember, the longer we stay oversold the tighter the rubber band gets and eventually you get a reflex bounce back higher than lasts for a few days. That bounce may only ultimately take us back to 1040 or a drop higher and that's when you can come in and short again. It's not easy taking on new short positions when you have deeply oversold daily and short term 60-minute charts. We can clearly stay oversold but I'd rather take on new plays when things are no longer oversold, or at least not on all time frames. The important thing is not to get bullish just because you get a roughly 5% or so bounce back up that seemingly comes out of nowhere.

Even the bears know they have to rest and reset themselves before taking things lower. There will be a decent bounce soon but it's truly impossible to time. Again, that can be used to go short or get out of longs you may be stuck in. And again, it's important to understand why we rally and to not get overly bullish.

Chart after chart that we're showing you shows the carnage. Not only from the index charts but also from the perspective of deflation. The Baltic index chart making new lows. There is just no pricing power out there and this only comes from a point in time when deflation is taking over. Where the economy has stopped cold in terms of growth. In fact, it's falling apart. No jobs. No housing purchases. No goods being shipped. Deflation! The world index showed today tells it all. breaking down without looking back. Always bounces to come but for now you get the point. Major technical breaks. Railroad chart. Airlines chart. transports chart. Cyclical chart. breakdown after breakdown and not looking good for short to medium term. To me, what seems to matter most is how chart after chart, no matter where you look, is showing deflationary action. It is what it is and we need to act accordingly.

When markets break lower or even when individual charts break lower we always have to look at the internals to see if the break downs occurred with confirming internals. Did volume increase on the breakdowns? Were there massively more decliners than advancers on those big down days? On the up days, did volume contract and was the advance decline line not all that good? The answers are clear. Volume did increase quite a bit on the day we lost Sp 1040. Volume has been light on up days. Decliners overwhelmed advancers on the break. There isn't any way for the bulls to play spin doctor here. The internals speak loudly and we all need to be listening. If the market had broken on light volume with mixed advance decline lines I wouldn't be buying this breakdown as real. However, everything points to it being very real. Again, it is what it is.

So here we are. We are very oversold across the board. A bounce of some decent magnitude is out there soon but hard to say from where. We all need to accept the market for what it is at the moment. There are no bull markets around the corner. we can all hope something will come out of nowhere to change what's taking place. Is it out there? well, I guess anything is always possible but for now, nothing is out there and the market is telling us to adjust to what seems to be yet another bear in a long line of bear markets since March 10, 2000. Have an awesome three day weekend and enjoy life safely.

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.


© 2005-2019 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