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Another Day Of Nothing.....

Jack Steiman from SwingTradeOnline.com at 12/08/09


And that's what we have basically every single day. The hardest part being is how difficult it is to short or go long stocks. Stocks set up to fall blast higher and stocks set up to soar fall apart. That's pretty much an every day occurrence. The market is getting lots of good economic news but this 1100 area is not allowing the market to move further along. Any time we get a bit over 1100, no matter what good news hits, it falls back from the breakout zone. You can make the argument that it's simply because the market needs to consolidate a bit longer to unwind the oscillators. The argument is starting to get old but that's how it always feels. That feeling of frustration. Takes you to your mental limit and just when you give up on it, well, you know how that sentence ends.

With the market basically unable to fall for any length of time now, it seems inevitable at this market will break up and out but knowing when that moment will arrive is more than a bit annoying. Again, probably the way the higher ups want it. You know, those invisible folks we always say control the markets. They do exist. So, yet another day where we attempted to move higher and also attempted to move lower, and guess what, we have another stalemate at this S&P 500 1100 area. Neither side wins yet it feels more and more as if the bulls really are winning. This diminishing volatility is tough on the nerves and these whipsaw stock movements even more so, but you need to hang tough folks. When you least expect it, the big move will be made. Most don't really care which way it is any more. They just want a bigger move that helps set up the next leg that would be sustainable and thus playable. Today simply added to the unknown. Another day where the higher ups laugh a little louder.

See today’s charts at SwingTradeOnline: INDU (Dow Daily), COMPQ (Nasdaq Daily), SPX (S&P 500 Daily), BKX (Bank).

The transports are rocking. Out of the blue we have rotation in to those stocks. It's no different than what's been going on for quite some time as we have seen money rotate and Not leave equities. When the financials have been in trouble, and they have been in some trouble for a while now, it would normally have brought the market down but not in this particular market. When you see large cap leaders failing you immediately equate that to market annihilation. We have so many big cap leaders failing and breaking down in so many areas, such as Apple Inc. (AAPL) and Goldman Sachs Group (GS), and yet there is absolutely no market erosion in price of any consequence. A very unusual happening for the stock market. The bears are attacking leaders, not only because of the obvious, but because they are heavily weighted and normally affect the branches from those leading stocks. Take down an AAPL or a GS and you have carnage everywhere, or so you'd think. Not the case now. Bifurcation from the normal way of things and to the markets benefit.

Let's discuss how the leaders can affect this market based on current behavior. There are different way to look at things here. The bears can say that when you see the leaders break, even if the market is holding up initially, it means trouble is dead ahead. That has been the case before in the past. The bulls will say that the market is showing amazing resiliency, and really, who could argue. How is it possible to lose leaders such as AAPL and GS, to name just a few, and hang tough? They will tell you that these stocks are up on a high pole and are being taken down individually to unwind things and nothing more. We know this, they'll tell you, because the other stocks in their areas are not being affected. The market as a whole is holding up too well for it to be anything other than their time individually as stocks to take a breather.

For now their argument is winning out, but there are no guarantee's it will continue to do so. Things can turn so fast. In this game there's usually no warning. No whistle going off saying this is the moment when it all turns around.
We need to see something we haven't yet, so as to not get afraid of knowing the trend is really still in place. You can't really panic because of some selling. Cash. No problem. Shorting? No way until we get a clean reversal below the 50-day exponential moving averages across all the major index daily charts. The trend is higher. Those leaders that have broken down are reasons for caution. After all, they themselves have lost their 50-day exponential moving averages. Will that be a harbinger of things to come for the market? I still think not. I still think we move higher in time. Certainly a move higher before breaking those 50's. Always pullbacks, but no breakdown, is my thinking.

FedEx Corp (FDX) raised guidance after hours. This is another one of those big leaders and it has done well. It's up after hours but it would not be great if this stock failed after gapping up tomorrow. If it does, it tells us that we may need to pull back further and gather more energy before trying higher again. I'll be watching closely all day.
United Parcel Service Inc. (UPS) is up in sympathy, and that, too, will need to be watched for insight. Bottom line is, we remain in a very boring, annoying up trend that has gone nowhere for three months. It's trying on everyone's nerves. I get that. You have no choice but to hang in there. If not, you can always walk away from the game. I don't think that's the best way, of course. I do think we have one more move up at least in this bull phase. Slow and easy.

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