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Stock Market Four Points To Breakout..........

Stock-Markets / Stock Markets 2010 Aug 10, 2010 - 02:14 AM GMT

By: Jack_Steiman

Stock-Markets

And that's all we need to get this market rocking higher. 1150 would be next, where an old gap lives, and then 1173. I know it seems impossible based on the fundamentals, but we have to play what we see. The fact that we printed such nice hollow candles at the 20/50 day exponential moving averages on Friday, and then we followed it up today with nice candles, tells me the bulls are starting to take control short-term, although it's not official until we can waive goodbye to S&P 500 1131.


The financial stocks are starting to look real nice here, although we've seen them set up and not make the move before. I have to say, they couldn't be better set-up short-term to rock higher, carrying the S&P 500 with it above 1131. The market is spending more time now hanging just below the breakout area, and this too, is more bullish action than we've seen before, where we'd get near the top, and then fall very quickly towards the bottom of the base. The bulls aren't allowing for much downside action, and you can almost feel the bears giving up. I'm careful, though, not to get too cute in thinking it's a slam dunk. It's not, and we must be patient to see the move before getting more aggressive. Just when you think it's a done deal, it's not.

Today's action bodes well for the short-term bulls. Friday's candle is probably the catalyst that gets us over S&P 500 1131. One step at a time, but good action if you're a bull.

Back to those financials. I can't tell you how important it is for these stocks to get moving out of their bases in order for the market to make a clean breakout. Without them, I'm afraid it's not going to happen, or even if it does, it won't be sustainable. A false breakout and failure, thus getting these stocks to move, is key. Good news there, I think.

I have watched these stocks fall back through their 20-day exponential moving averages over and over again. The last two times over the past two weeks the 20-day exponential moving average has held perfectly and caused a strong move back higher. It's time everyone. The financials are set to go and we should see the move up sooner than later. I really believe we'll see the move very soon, but again, I won't count on it until it's a done deal.

The foreign countries are showing some fabulous action with the German DAX, and along with the France FTSE and the Paris CAC having some fabulous patterns in place, acting like bull markets. They may just be, and when these countries rock higher, it usually sucks the United States up with them, even if we lag their overall performance. It's hard to find a bad market anywhere else, other than the United States, and yes, it is possible for us to be in a bear market while the rest of the world is in a bull market, but that's not what normally takes place. If the rest of the world is doing well, we usually, at least, move somewhat higher. I really have searched around and simply can't find a bad looking set-up elsewhere. It can change, of course, but these charts aren't showing any signs of anything negative for the short-term, if not medium to longer term.

The fed announces their decision on interest rates tomorrow, and discusses the state of the economy and the risks. He has been doing this for a few weeks now. He's been telling everyone that a full recovery is at least five to six years away, which is why you will not hear anything about interest rates being anywhere except at basically zero. The market will be listening to just how pessimistic he is or is not. It seems like the market wants him to say just one good thing. If he does, it should be the necessary food to get this market over 1131, for a while at least. Sadly, it seems we're controlled by each important economic report that comes out on an almost daily basis. I can't imagine there's much he will say that will shock anyone as he's already put forth the truth more times than most wanted to hear over the past several weeks to months.

It's still all about 1080 to 1131. Anything in between is just noise. Just the way it is for now. The market will make its move out of this range sooner than you think. Doesn't have to, but it's setting up to do so. Once that happens, if that happens, then you simply trade the new range created, which would be 1131 to 1150 short-term. One step at a time, of course.

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.

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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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