Stock Market Can't Sell....Froth Ramping Quickly...

By: Jack_Steiman

The market is in the zone. No sellers. It tries to sell, but simply can't. The S&P 500, after gapping up early, fell back about a ten handle. Once it goes red the buyers come rushing back in. Complacency at its finest. And how strange that we opened higher since last night the futures were hit down after Intel Corp (INTC) reported a very weak yearly outlook on top of twelve thousand layoffs. The stock was down 3%, only, of course, to come rocking back today. As usual the futures recovered, and the market said sorry bears. There doesn't seem to be anything that can hit this market lower. Think about it. Most of the big names thus far have had very poor reports. The market doesn't care. Even if that stock falls the market simply rotates away.

That story is seven years old and counting. The game of rotation is classic in bull markets. What it does is allow for unwinding in individual names, while the market itself holds up very well. No different now than what we've been seeing since 2009. It takes on different looks, but in the end it's all the same. So today we tried to sell and it just wouldn't happen. The fed bull is continuing on its merry way with no interruptions other than brief, small interludes. Another good day for the bulls as overbought and negative divergences are being laughed at. They shouldn't be, but somehow they are. Can't argue with price. If you do you lose. Stick with what price is dictating. Lose the emotion. Today was an easy day to get emotional due to INTC last night, but it's not paying off if you look for truth. Score another victory in a very long line of victories for those frothing bulls.

The world of negative divergences is getting more and more interesting. At first all we had to keep an eye on was those nasty negative divergences on the monthly index charts. Severe and waiting for the victims who dare go against it. Now we have gotten to the point where we are dealing with negative divergences on the daily index charts, and to add to the risk, we're also dealing with extremely elevated oscillators and overbought conditions. But wait, there's more. The negative divergences have danced their way over to the sixty-minute, short-term charts. A triple of negative joy. The market's reaction is the usual. Don't bother me kid. You're in my frothing way. The market is somehow able to shake off negative divergences on three, key, time frames. I have no idea how it's getting the job done, but it is. In the past, this would have been the kiss of death for the stock market. Not anymore. Those days are gone, and who knows if they'll ever come back. Let's see how long this dance can go on, especially if we clear the old highs at S&P 500 2134.

It didn't take long folks. There was that tipping point in the markets inability to fall where the bears gave up, and it seems to have happened the week of April 11. Last week's action got the bulls really frothing with the bears saying uncle. I give!
The bull-bear spread ended last Friday ramped by 100% from 13%, and change, to nearly 28%. With the market hanging in well this week, I would imagine that intra-week we are at the first red flag of froth at 30% on the spread, and if this holds, we may move above 305 by the end of the trading week. It didn't take long. The bears have finally given up, and the bulls just can't get enough. We are not at levels that say look out, but it is interesting how fast this is now ramping up. Another a month of solid action, and we'll likely approach the sell signal of nearly 40%. Anything above 35% is scary for the bulls. Above 40% is imminent plunge. It took +46% for the market sentiment to top last, but then the market fell between 15-22%, depending on the index.

So now we watch the sentiment world once again. That said, for now, the bulls are in complete control of your television set. Do not adjust it. They are in control.

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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