Stock Market Push-Pull Continues...

By: Jack_Steiman

The story is definitely an old one. A boring one at that. Push and pull, and then some more push and pull with both sides seemingly exhausting, themselves. While they catch their breath, they realize that they've done nothing to get excited about. They bend down with their hands on their knees and say why bother.

This is what the market feels like and is for that matter. There's just no clear direction after all these months of both sides giving it their best shot. Make no mistake. Both sides have given it a really good try on several occasions. Both camps have had reason to get pumped up about what was coming, but sadly, neither side has seen their dreams fulfilled. It's one disappointment after another.

To their credit, though, both sides haven't given up even when they've experienced these disappointments. They come back for more. They seem to thrive on the pain of failure. Good for them, but not good for this market as we are still directionless. The bulls were the last to give this a directional try. They've had no excuses, to be blunt, for their inability to get this rocking. Hopefully, that will take place soon, but the past few days have been economic report nirvana for those bulls. Great jobless claims. Great ADP Report. Great Jobs Report. Solid ism manufacturing report. The result is flat. The news should have blasted us up and out. It didn't. It can only blame the headaches in Europe for the failure.

The problems there are just too intense for our bulls to overcome for now. It doesn't mean it won't happen next week. It just means it hasn't happened yet, when opportunity was clearly knocking down the door. So the week ended with the bulls still holding on to their chance to run this next week as we closed decently above S&P 500 1267, the breakout level taken out earlier this week. We've churned there for three days straight, but that doesn't mean it still can't happen for the right mix of news can occur. We will know soon enough, and we all know by now that churning is not good once you've made an important breakout, or breakdown. It's time for the bulls to make their move if they're going to do it. If not soon, the bears will take back ove,r and take things down the triangle. And the beat to nowhere will continue on as it has month after month for far too long now.

I have been around for far too long in this business, but there is something going on now I can't say I have seen very often. The bifurcation sector over sector, and more importantly, stock over stock, is stunning. There are so many stocks, recent leaders, acting terribly, and in clearly defined bear markets. On the other hand, many leaders are acting beautifully, and are in clearly defined bull markets. The spread is unusual to say the least. This would explain the push-pull to a large degree, but you rarely see this type of behavior. Different behavior from stock to stock makes this market virtually impossible to understand what it's saying about the bigger picture.

Each side has reasonable arguments as to why it'll ultimately play out the way they expect it to. We need the market to have the majority of stocks behaving the same way to gain full insight as to what the market will be doing next. As long as we continue to see this type of heavy bifurcation, it'll be tough to make decisions without feeling somewhat anxious about them. No certainty equals a nervous trader. Things can change so fast when these types of conditions exist. Let's face it, at some point down the road, the majority of stocks will be moving in the same direction when that one piece of news hits that turns the tide directional. It will happen, folks. No one has a clue what that news will be, but it's out there, and will be known to the masses when they all least expect it. Isn't that the way it always is. A large gap one way or the other when everyone's guard is down.

There is also bifurcation in the way the weekly and daily charts look on the major index charts. If we spend time studying the daily charts of the Dow, S&P 500 and Nasdaq, we can see the MACD's have been more horizontal than vertical. Not the best way to see the MACD's behave in a more upward trending environment. Vertical would be best and give me more confidence that we're about to turn sharply higher. However, when I study the weekly charts of those same indexes, they look far more bullish in nature, and thus, the puzzle gets more and more interesting. It would be too easy for the daily, and weekly, charts to be in concert with each other. It's never that easy it seems, although we know at times it is. It just hasn't been for so long it seems it never is. It's not that the daily charts look bad, because they don't. It's just that they don't look wonderful by any means.

The MACD's just aren't doing the perfect vertical dance upward as price moved higher. You don't need the two different time frames to agree with each other, but it sure helps when trying to understand both the short- and longer-term views. I will always go by the daily charts first as we all should as it's more for the shorter-term. They say neutral as does just about everything these days. What else is new! So yes, the weekly charts aren't half bad at all, and that gives the bulls some clear hope, but the daily charts aren't anything worth getting excited about. Not anything to get upset about if you're a bull either. Just not much of anything.

When markets are this confusing and difficult, it should be clear to all of you by now not to get involved too deeply on either side of the game. The bulls did clear S&P 500 1267, and although we are clearly churning, the bears have yet to take it back below. 1250 is support on gap if we lose 1267. On the top side, the bulls have yet to get to the old highs at 1292. If they can clear that next level of resistance, 1305/1325 is up next.There's lots of support and resistance levels pretty close together, so you have to take each level one at a time. It was a good week for the bulls as they started things rocking higher early on, but didn't run. That's what they really needed to do, but couldn't get it done. Let's face it, folks, no one has control, and this means all of you should be exercising extreme caution with your trading by not being aggressive. Some exposure is fine, but too much is completely inappropriate.

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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