Market Holding Below Breakout, Bullish Action Overall
Jack Steiman | Oct 13, 2015 12:47AM ET
The stock market plays games with the heads of the traders out there. For a good period of time it will not be able to move higher, and then out of the blue, things reverse and it simply can't fall very much. It transitions and fools the masses over and over, but isn't that its intentions! You bet it is. To keep you guessing and getting frustrated time after time. The house usually wins, as we all know. That's mostly because the majority of folks will play this game emotionally instead of from the fantasy that it is. In other words, folks are looking for truth, but rarely are they getting it. That's how the market wins. It knows you'll be emotional, and it knows you're playing a very tough game, and, therefore, thinking logically. Logic rarely plays out in this game. The unexpected does, or in other words, the opposite of what the masses are doing. It feels good to think like the herd. It feels right to be thinking like the herd, but the herd is most commonly wrong. When things get too frothy, the market lets you know about it, and when it gets too pessimistic, you'll get the same wake-up call in reverse.
Right now, there still seems to be too many bears and too many shorts in this market because it won't fall very much. Lets be honest, it's not holding up because the world economies aren’t doing so well. They stink overall and are still showing declines. In fact, the world global economy is now showing a reading of 50.6, or just a hair above recession. Last year, the number was in the 52's and in 2013 it was in the 53's. So you see the accelerating decline that's taking place. The news isn't good, but the Fed forcing low rates has kept things up in the market. Now the market doesn't want to hear about low rates. It wants a better global economy, and it's not getting it. Only pessimism is keeping this market alive. How long that can last, and how high we can go, remains unknown, of course. We'll just play what we see as usual based on price and those accompanying oscillators. For me, there is no other way. Any other way would simply be too emotional, and we know how that works bigger picture.
Earnings season is upon up. Tomorrow we will get a good economic reading from Intel Corporation (O:INTC), the leading semiconductor stock in the world. INTC is important not only to the world of the Nasdaq, but to other parts of the market, since so many work underneath what INTC does. The branches out if you will. If INTC is doing badly, then many other related stocks will get hit. The suppliers will take a bath, and the sector itself will be guilty by association. After INTC, we will see one big and important release after another, day after day, from all the most important Nasdaq, S&P 500, and Dow stocks. The banks as well are about to take flight.
Get The News You Want
A very bad earnings season is being built in as many companies are pre-warning, and when they're not, the news overall hasn't been very good. All of this said, if one or two big boys and girls can surprise us with a better than expected outlook, we could see this market move up rapidly. We know the fuel is there due to the high number of short positions that are out there. Will Apple Inc. (O:AAPL) be a nice surprise? Will anyone important be? If not, it's hard to imagine us moving too much higher. All it takes is one good shock to the system of pessimism, and off to the races we go. Buckle up as it's that time again. It always seems to be that time again. This time, however, it's more important than it’s been for quite some time.
To sum it all up, we should focus on the 200-day exponential moving average on the S&P 500 at 2031. If the bulls can find the right news, and get this average forcefully above on a closing basis, the bears are in for some pain. It's possible that over time this could lead the market back up near, or through, the highs at 2134. Massive-negative divergences would then form, but we'll deal with that only if we have to over time and figure out what's next. For now, it's about approximately 1950 massive support versus 2031 massive resistance. Anything in between is truly just noise.
A day at a time as we move along. As I mentioned above, the key for the both sides may be the earnings season.
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