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A Look Back At Stock Market 2015......

Stock-Markets / Stock Markets 2015 Dec 31, 2015 - 10:27 AM GMT

By: Jack_Steiman

Stock-Markets

While 2015 was a boring year for the market, it wasn't boring for traders, and the experience overall was not a good one. It was the year of transition. The year where the bulls didn't get spoon fed the way they had for so many years prior. They had become accustomed to getting exactly what they want all the time. If the market fell a bit, no worries. It'll just blast back up in short order. It was the year when the market said not so easy this time. Time after time! As the year moved along we saw the bull-bear spread tumble lower, getting as low as 7% last week after hitting near 47% just a few months back. The constant neutrality has been playing on the emotions of those ravaging bulls. The giving-up process began after roughly eight months of being left in the cold due to high expectations.


The culprit in my opinion is mostly from those monthly charts, which have been flashing negative divergences for longer than I can remember. It's still hard for me to envision a market blasting high with force based on those monthly charts. But it can happen, especially since froth is long gone from the equation. There are other factors, such as stock valuations along with a declining economic back drop. The ISM Manufacturing is now officially in contraction with the last reading being below 50.0, and doing so by more than one point. We get an update on that early next week. A declining economy, poor valuations, and bad monthly charts usually would equal a rapidly declining market, but the Fed has held things up through liquidity and low rates. So to sum it up, I see 2015 as the year when reality caught up with the market to some degree, but one that held up due to the Fed. The combination is difficult on the minds of traders, and most likely they had a bad time of it. A very tough year for the masses.

To understand the nature of a declining economy we need look no further than the world of the transports. Everything in the sector seemingly painted a picture of a declining global environment. Truckers, airlines, and especially those railroads, took it on the chin in a big way, especially in December where the sector was down roughly 7%. A very nasty time of it since the Ism declared an economy in contraction last month. Oil is in decline and while that would seem to be good news, hauling that oil is now harder since demand is going away. Folks are spending less so the airlines aren't seeing the traffic. You get the idea. Declining commodity prices isn't always the good news one would think it would be to the world of transports.

Until the United States economy starts to rock back up one would think this important, real-world sector is going to struggle for the most part. Other bearish sectors exist, but none more than the world of commodities. The endless bear market is still with us and showing no signs of letting up. Gold and gold miners fall very hard, and then once sufficiently oversold they rally to unwind, but then quickly fall again to new lows. There are still no sustainable signs that things will be getting better there any time soon. Truth be told, there are actually very few areas looking healthy. A few technology stocks are carrying the day, but overall nothing is great out there. It's still a bad economy and the majority of sectors are reflecting that reality.

The market for the most part is flat for the year, but the trend in theory is higher until the S&P 500 loses 1993. That's the longer-term view. Short-term, we have strong support at the 200-day exponential moving average at 2043. 2094 is resistance followed by 2104, and then 2116. 2134 the top or the old high. The market is doing a whole lot of nothing, but you don't want to get too bearish too soon just because we aren't going anywhere. You want to be appropriate. You look for set-ups, but you don't chase overbought. Best to buy at oversold or at least back at neutrality on the sixty-minute oscillators. Buying strength in this type of market can be a very bad idea for the most part.

This is not the market of 2009-2014. Things are very different now, and far more difficult. Nothing is easy for either side, but it's best to keep a small upward bias for now, until we lose support levels at 2043, and then 1993. A loss of 1993 with a bit of force and volume would be lights out time for the bulls. So be careful. Don't force a market that won't allow for that type of behavior. Adapt to where we are. Accept it and you'll come out on the other side mostly unscathed.

Peace and Happy New Year,

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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