Jack's Wrap - Bull Continues...


Monday March 26th 2012
Bull Continues...
by Jack Steiman www.SwingTradeOnline.com

We can try to pull this apart from many different angles, but the reality is the bull market continues, because we have Fed Bernanke, who will do whatever it takes to float the markets. With interest rates low, there's no other place to really put your dollars. Keep it simple. This doesn't mean that at any time we can't go into a prolonged period of going nowhere. The market is showing continued solid action on weakness, and will likely do this type of behavior for a long time to come. If we pulled back 5%, it would feel like death. But in truth, it would do little to the bull market technicals. With the market trying to hang tough, it's going to take some pretty bad news right here at home to knock this market down appreciably. That could come in the form of a bad ISM Manufacturing Report next Monday. It would be interesting, if the number was bad, to see how well the market would, or would not, hold up. As we know by now, the bull market can do a great job ignoring the worst of news. Not sure that would happen now, since the market has run up. We'll see what that number tells us. In the meantime, we simply play what the market is telling, us. For sure it's a bull market, but please recognize that at some point, the market will need a stronger pullback, or a longer period of basing.

There are areas of the market that aren't doing very well. That includes some of the oils, such as Apache Corporation (APA) and Anadarko Petroleum Corporation (APC). Some stocks are losing support and turning back down after back testing, so the market is not clean. That, however, is normal as what's bearish now will be bullish later on. Some areas go into quick bear markets, and then, somehow, find a way to recover, out of the blue. If you're in them at the wrong time, it can be very painful. Most of the areas of this market are in bull market mode, and that's key. You want to see the majority of stocks, and sectors, remain bullish, even as some smaller areas of the market are in bear mode. For now, this is what's taking place, and as long as we see this hold up, so, too, will this bull market.

The market was strong all day today. The bears wanted the market to move down towards 1370 to create some advantage and momentum. In the end, the bulls made sure 1370 wasn't even thought about from the opening bell as it gapped up, and stayed up, all day as it closed strongly. 1414 is still resistance, but if we can clear, cleanly, then there's the real chance we can visit as high as 1440/1450 before the next significant pullback ensues. The momentum is strong, but here we are again, at overbought on the Nasdaq, across the 60-minute chart, and its daily chart. The S&P 500 is nearing 70 RSI as well on its daily chart. This means we will have to take a breather again, soon, and use that to our advantage. Staying with a long bias is the only way to play. Using strength to think we're too overbought, and thus, must short has really hurt the bears. We stay overbought, causing some strong losses to those who are trying to be too cute in shorting this bull. It’s best to stay with the trend in place for sure. Again, we will need a longer basing period, but who knows when that will kick in forcefully. It’s day by day, folks.

Peace,

Jack


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