Hammer time. Ugly, ugly candlestick on the Nasdaq today off the highs. It tried to back test the broken 50-day exponential moving average, but couldn't make it stick. Sellers came in hard at that point. A back test and true failure, but for now you can't be bearish, because the S&P 500 and Dow remain bullish on price for reasons that are hard to explain.

Or are they? More on that later on.

The oscillators are horrible on the S&P 500 and Dow, and, thus, should fall in time, but we shall see. The market leader, the Nasdaq, painted a nasty picture today that really shouldn't be ignored. Froth stocks remain firmly entrenched in their ugly bear market with more and more folks feeling the pain of trying to chase them simply because they get oversold. They are staying mostly oversold and fooling the masses into buying them, only to suffer unnecessary losses.

Emotion is rough on folks who are used to being rewarded for buying weakness in any of those stocks. Today was clearly no different. While every major sector closed off their highs, the Nasdaq was treated, by far, the worst of the bunch as those four-letter stocks with no P/E's or extremely high P/E's taught more lessons. Not good action to see those stocks unable to clear 50 RSI's on their short-term sixty-minute charts before tumbling back down.

The problem is the swiftness for which they fall. It's amazing how fast they get whacked. Dollars fly off like dust in the wind. So after a promising start to the day, we saw some late day bearish action, particularly on the Nasdaq. It tells me to tell you that cash is a beautiful thing for now.

So what was the catalyst for the huge move up this morning? I think a lot of it came after one of the Fed members, I'm sure on the orders of Yellen, came out and said that rates would remain at the lows for at least through 2015. That's not to be taken lightly as many lately have spoken about the Fed raising rates within a few months. We now know this won't be taking place. Once again, yes, as the market was close to breaking down, the Fed comes out with a statement that protects the market. No shock as you all know by now that the Fed has one job. To protect the stock market so as to protect Main Street.

Once again the Fed has made it known that the stock market is the only place for the average person to get any potential significant gains over the next many years. Folks won't go ten years out getting 2+ percent. The Fed is forcing a bull market and has been doing so for many years. This will continue. That doesn't mean we won't have corrections, but the Fed keeps assuring everyone that the rate world will be at zero for quite some time. Forced bull is still with us. Don't fight it. You'll lose.

Nothing has changed. Until the S&P 500 can lose the 50-day exponential moving average at 1840, with force the bears have accomplished nothing. Yes, the Nasdaq is now nicely below the 50's, but it needs the S&P 500 to join in. Only then are they in total control, thus getting bearish here, even with today's bad action off the highs, makes little to no sense. The excuses have run out for the bears, but you can understand why it's so tough for them. With the Fed defending the market, it makes their job extremely difficult. So below 1840 the breakdown and above 1883, the breakout on the S&P 500.

Can the S&P 500 break out without the Nasdaq doing well?

Great question.. Just watch 1840 and 1883. Also, continue to avoid froth would be my best advice.

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.