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Stock Market Debate Rally...Still Nowhere....Still Bullish....

Stock-Markets / Stock Markets 2016 Oct 11, 2016 - 11:36 AM GMT

By: Jack_Steiman

Stock-Markets

Last night we had the second debate between Clinton and Trump. The market wants the status quo because if Trump wins, he said he would remove fed Yellen. That's not what this stock market wants. It wants Yellen since she, and she alone, is responsible for quite a bit of the wealth most have in stock market gains over the past many years. If she goes away, it is quite likely rates will go up quite fast and kill the market. The market wants a democrat since this will make certain that Yellen will remain in office, and, thus, the world of low rates and, therefore, more Disneyland is possible.


It seems that most think Trump made no progress last night. I didn't even watch. I'm going by polls and how the market reacted. Clearly it thinks Clinton is still leading. If it ever thought that was in danger, we would see much lower stock prices. The closer we get to the election finish line, the more the market will celebrate if it thinks Clinton is still in the lead. The market clearly wants no part of a major change in politics, so, thus far, all is good within the world of insane stock prices. One more debate to go. We shall see how the market reacts to that one as time moves along, but, for now, it appears the market feels the democratic party will still hold the office of President once the election has passed.

The Nasdaq 100 is leading, and that's what a bull market wants to see when going northward in price. When the S&P 500 and Dow lead, it means folks are looking for safety, and safety has no place for those aggressive, frothing bulls. The S&P 500 and Dow charts have two gaps to clear, while the Nasdaq 100 is rocking along near its old high. That said, the Nasdaq 100 is dealing with a significant negative divergence on the daily chart. Will it ever matter? Hard to say as this market has done a great job of ignoring those types of divergences for quite some time.

They usually play out no worse than a lateral move over several weeks to unwind it. If the divergence ever kicked in this market would get smoked as it's quite large in nature. The market seems only to focus on political news and anything done by fed Yellen. Some day that will go away but it doesn't appear to be any time soon. Maybe the election has to come and go before the market focuses on some truths that are out there. The only thing we know for sure right now is the Nasdaq 100 is leading in price, and that means folks are NOT looking for the safety play. That will have to reverse before the bears can find any hope for themselves.

So yes, we are still stuck between the two key levels of 2100, or trend line, and 200-day exponential moving average support and 2194 or the old double top. I have given up trying to figure out which will break first but the bulls are still in control above 2100. All the market has done since the double top at 2194 is base out while trying to unwind overbought oscillators. Nothing bearish about that. Don't get too aggressive would be my best advice between these two key levels of support and resistance. Find the occasional play, but understand your environment. Those who have over played the past few months probably wish they has remained more patient. Sadly, day to day continues.

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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