Jack's Wrap - Daily's Good....Market Action Bad

This is a historical archive of Jack Steiman's closing market wrap for subscribers to SwingTradeOnline.com. The pages here are made available to the public after seven days. If you would like to sign-up and receive these alerts in daily, please register at https://www.swingtradeonline.com/reg/

The Macd's on all the daily index charts moved up nicely on the rally off the bottom. That's the good news and this impulsion allowed the markets to rally over one thousand points on the Dow. Solid action and the type of move that would give the bulls hope. It suggested that any move down would not get back to the old lows at 7900 Dow. Obviously we are not that low after today's move down but we're getting awfully close. 8200 is trend line support on a closing basis and that's very close for sure. The daily charts are still holding those divergences and this suggests that the old lows will hold but we also know that this bear has been very different than any other we have experienced in our lifetimes. Maybe those divergences just won;t work or worse, they work short term and afford the market a bounce but a small one which sets up a triangle from which the market can easily break down from after some back and forth action. That's the scenario that scares me the most because should that happen then a retest of the 2000 bear market lows are in the cards near Dow 7200. Heaven help this market should we lose that level in the future. That would likely set up a very long term secular bear that you don't even want to think about so let's hope we don't get that triangle and if we do, let's pray we don't lose 7200. Fold up the bullish tent if that ever takes place. That could lead to ten plus years of a bear. Let's hope I never have to talk about that again. Just know 7200.

The market started out flat after being down huge over night. the reason for the rally was a massive rate cut of 150 bp overseas. The futures rallied nearly 200 points on the Dow but by the time the market opened, the market said who cares and fell back down. After opening lower, the market rallied back up and the Dow went green briefly while the Nas lagged the most, a bad sign. It didn't take long for a trend down day to ensue. Slowly but very surely we stepped lower and lower and by days end the markets closed off their lows but still down hard. Nothing good to take from today. Volume increased. The advance decline line and advance to decline volume were fully supporting the move lower. The bears are pounding their chests tonight, trust me. They have every to do so.

Here's a troubling sign. The Vix, which fell by almost 50% off its terminal pattern, found strong support yesterday at its 50's and today it was able to get right back above its 20's which it just lost. That is a very bearish sign. A huge move up today solidified that. It's suggesting some back and forth action a triangle would create and that's exactly what you don't want to see if you're a bull. Nothing is etched in stone. It may not play out that way at all but you have to try to see the message it's sending. Unclear still but not a good sign for the bulls or this stock market. The Xlf, one of our charts tonight, is already setting up in that triangle. Please take the time to look at it. You can see the reality of a back and forth within that triangle but it's nasty and likely to break down. only time will tell. Two other charts tonight, Goog and Aapl have the same set up going on. Not pretty folks. Again, lots of room for back and forth but you get the picture.

There's another huge and I mean huge problem for the bulls here. Leaders continue to get slaughtered. Gs, Aapl, Rimm, Ibm and hundreds of others just can't get a bid and are being sold day after day and without regard for price. More of the just get me out type of selling. We need to see the leaders of the past bull take over and lead upward and out. Instead, they are doing exactly the opposite. Goog can't get out of its own way and neither can Bidu or Isrg. The list is truly endless. It doesn't matter if you look at the Sp or Dow or Nas or any other index. Each one has its own world of leaders getting slaughtered. Again, a huge red flag for the future. Bounces always within their triangles but if those break down, look out below. It doesn't matter how cheap they look, look out below. We can only watch and wait to see how things play out but there are some very real possibilities these triangles will break to the down side. Watching the Xlf in particular is the key. If they break the whole market goes in unison.

We can only watch to see what sets up but there is a lot of evidence that things are deteriorating technically. If these solid daily divergences get wiped out then look out below folks. We have maintained a safety first approach for good reason. These triangles are really nothing more than continuation patterns but of course one day that'll stop because the market won't go to zero. For now though we must respect these patterns and they are bearish.

Peace

Jack

• Intraday Swing Trade Alerts
• Action-Oriented Trading Advice
• Detailed Guidance for Each Trade
• Technical Chart Analysis of Stocks/Indices
• Market Timing from a Pro