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Bases Remain...Financial's Weak....

Jack Steiman from SwingTradeOnline.com at 12/11/09


Folks, there are only so many ways I can say the same thing day after day is this, the hardest trading market I've seen in a very long time. Every day there are great long and short set ups that fail for no good reason. Some work. Some do not and there's no rhyme or reason to it. Normal technical analysis just isn't working. Rotation everywhere in a whipsaw like fashion. It seems almost intentional the way that the powers that be are moving things around. Earlier this week we lost the top of the range and headed down and touched 1085 S&P 500 horizontal support where naturally the bulls came in, even though it looked bad, and saved the breakdown.

We moved higher today but all we did is pull off the days highs, printed some black candles and basically ended up in the middle of our recent range. I want to say, "are you kidding!", but I've moved way past that as this has been going on now for three months and we're actually seeing the range get smaller. I didn't think that was possible, but for a while the range was 1050 to about 1110. Now it's 1085 to 1119 with most of the time spent at around the 1100 level.

See today’s charts at SwingTradeOnline: NYS (NYSE Composite Daily, COMPQ (Nasdaq Daily),) MID (S&P 400 Mid Cap Index), WLSH (Wilshire 5000 Daily), SPX (S&P 500 Large Cap Index), COPPER (Copper Weekly).

The carnage from day one began with the implosion of the financial system. Bad loans all over the place and we saw the price the world had to pay. We lost Lehman Brothers (LEH) and BSE SENSEX (BS) along with many other smaller firms, AB SVENSK SP ARNS (SAD). The market has recovered, but at this moment we see the financials lagging again. Wells Fargo & Company (WFC), a major bank, broke down badly today. Look at the WFC chart tonight. A massive head and shoulders breakdown, which measures at least four points lower if the breakdown holds, which is hard to trust in this market. However, big volume and a slaughter on it today.

Yesterday's FAS or Direxion Daily Financial Bull 3X Shares ETF, was set up to explode higher off the 60-minute chart. It shot up at the open and quickly died as JP Morgan (JPM), Goldman Sachs (GS), and especially Wells Fargo (WFC), just died as the day wore on. GS is already on breakdown. Once again technical analysis did not tell us the truth. For this market to break out and stay broken out, it will need the financials to explode up and out.
WFC is not giving any hints that this is about to take place. If you're a bulls bull you are hoping for it but the set up is not great there. Again, go look at that nasty candlestick breakdown on volume today. Not pretty. The financials need some news that's just not out there at this moment in time, but of course, can come out of left field the way most things happen in this game.

Commodity stocks are starting to show some head winds here. They got oversold and are trying to bounce up but it's not very impressive. Some were good today but many were not. Many gold stocks have huge gaps on big volume off the top. Spend a moment and look at Newmont Mining Corp. (NEM). That daily is in trouble. It can bounce up, but the huge volume gap down from some days back is going to make this stock sweat hard to get back through. It's the kind of gap down that doesn't normally get taken back so now we have to worry about the commodity world starting to crack along with the already broken financials. The PowerShares DB US Dollar Index Bullish (UUP) is trying to hold on to breaking through its 50-day exponential moving average. If it blasts through one of these days, then the commodity world will get annihilated. It's a toss up. For now you need to mostly stay away from those stocks. They are not the pillar of strength at this moment in time.

So yes, we see a stock market that is determined to drive everyone to extreme levels of frustration. I see it out there, trust me folks. At levels I haven't seen in years, if ever. Stay mostly cash if you like. Until we break below the 50's or break above 1119 with force and volume, the market is Las Vegas. Mindless meandering with anything and everything possible from day to day, regardless of what the charts may be suggesting. Heavy cash is the way.

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