Jack's Wrap - Gap To Gap...Hesitation At February Highs...

Friday April 8th 2011
Gap To Gap...Hesitation At February Highs...
by Jack Steiman www.SwingTradeOnline.com

What a boring market. I'm sure every one of you feel the same way. This is what happens when a handle is trying to be put in place. The market finds an area of resistance it will struggle with, but also finds an area of support it appears it doesn't want to lose. Those lines seem to be clear, especially on the Nasdaq where we find gap resistance at 2808, which is stopping all rally attempts. We hit 2808 today on the nose for the high of the day. The bottom has two areas that come together as one. The 20-day exponential moving average is at 2759 with massive gap support at 2760. 2759/2760 will be very tough for the bears to take down and keep down. Today was boring at its best. After a gap up that tested 2808 we spent basically six trading hours in a back and forth market. Neither side could do a thing all day. They both tried.

Buying got sold, and afternoon selling got bought up. Remember, please, that handles are meant to separate you from your dollars. The idea is to frustrate you at every turn. No matter what you do, whether long or short, you will struggle. Today was a lesson on keeping some exposure for sure, but not taking on more than a few plays maximum. Keep it light so if we move down a bit off the top and stocks struggle a bit, you won't panic out of them. If you're in too many plays the inclination is to run out of a few plays just to play it safe. Just in case things get out of hand. Less is definitely more in handles folks. So the parameters are set up, and neither side may clear with force for several weeks. Just the way it is folks. The handle move is on. Expect whipsaw. Expect gap ups to fail. Expect gap downs to be bought. Expect both sides to end up frustrated for some time.

There are certain events that take place in this game that have a way of taking place no matter what may be happening in the world. The market fell hard, and came back off the bottom with a nice surge. Yet somehow, when it got to those gaps, or the old highs as we saw, on the Nasdaq and S&P 500, the market stopped cold in its tracks. No money, or bulls, left to take them through that resistance. No bears around to blast it down. In other words, when a market has a plan, good luck trying to take that plan away. It seems to find a way to stick to that plan no matter what takes place away from the market.

No matter what events may be going on from earthquakes to countries going bankrupt can disturb the process that seems to be planned. I don't necessarily understand it, but it's as if the market has a mind that can't be seen. That mind has a plan, and will tune out all outside matters until that part of the plan has been satisfied. So with this market needing a handle over a certain amount of time, you can ask yourself how it's holding up, or why it's not breaking out, but in reality, you're only wasting your time and energy trying to figure it all out. There are no answers. Just what needs to happen at any and all cost. We can't know how deep the handle, although 2760 is solid support. We don't know how long in time this whipsaw continues. Just accept the fate for the short-term and plan accordingly.

The market has two major headaches it has to deal with versus the monster that sits by its side and says all is well. Don't worry about a thing. On the negative side of the ledger we have oil at roughly $112 per barrel. Getting totally out of hand and makes you ask the question, when is the president going to announce the use of our own oil reserves so as to knock the price of oil on its can. The second major negative is sentiment. A nearly 42% spread of more bulls to bears. This is not good for anyone who is bullish. On the bright side of the ledger is the number one most important element in the stock market. That, of course, is liquidity.

Mr. Bernanke is making sure we are flooded with dollars that can support higher stock market prices. His single goal being to keep this economy humming along at any cost, including runaway inflation, which we are starting to see more and more of, although he denies exists, as if we're all unenlightened about the truth in front of our noses. By the way, a bag of oatmeal I buy from the health food store is now $8. A year ago it was $5. Don't tell me we don't have massive inflation being created as we speak. Oil and sentiment can knock the market on its bottom short-term, but liquidity will always save the day in the end. We'll watch to see how this all unfolds in the weeks and months ahead.

The poor financial stocks just can't make the move, although there is hope in the pattern on the daily chart. They got so close to taking out gap resistance, but rolled over and failed. However, the rollover for these stocks could easily turn into a shoulder on the right side of an inverse pattern. Time will tell, but if those oscillators behave just right, then this could turn out to be a bullish pattern in the longer run. What a gift that would be to the market as it would then try to breakout with a strong measurement higher.

I don't want to get into numbers now and create expectations, but the measurement is significant. A lot of work is ahead of the bulls to get the job done, but the pattern isn’t hopeful. The transports, a sector that has somehow thrived in this push up in oil, finally gave it up today. But it's way too soon to say that further headaches await them. The fact that so much bad news previously couldn't kill them, today's larger move down may be a one time event in order to unwind things on the daily chart. These stocks will need to be watched very carefully if oil doesn't take a hit down pretty soon.

Folks, bottom line is it looks like things are going to be quite boring for a while. Adapt and adjust. Don't let the boredom move you to do things with too many plays that will come back to haunt you. 2760 and 2808 Nasdaq are the numbers to keep focused upon in the weeks ahead. Hopefully days, but I think weeks. The longer we handle the more bearish some will get, the deeper those oscillators will unwind.

Have fun this weekend. Do something nice for someone. Play with children if you're lucky enough to do have the opportunity.



Sign up for a
Free 15-Day Trial!
  • Jack's Intraday Swing Trade Alerts with
    Action-Oriented Trading Advice
  • Detailed Guidance for each Trading Idea & Live
    Interaction w/ Jack
  • Technical Chart Analysis of both Stocks & Indices
  • Market Timing from a Pro who called the Market Top in
    October 2007 & Bottom in March 2009
  • Live Chat Room, Audio Q&A ... and Much, Much More!
Join Now!
Enjoy Jack's daily market technical analysis
FREE by signing up below.
We respect your email privacy.


“As a 7 year subscriber to your service, I was never more in control of my portfolio than when I started with you. I took the course, listened to most of the chats and it has been a wonderful education all these years. All the improvements you've made to the site are terrific. My investments, thanks solely to you and this service, have generated great returns while managing the risk. To me, that's the name of the game. I can't imagine navigating these past years without you so many, many thanks.”
"HSowel" - Trading Room2015-08-10
“I started with the trading room... and couldn't be more Happier!! I've been reading Jack's Wrap for about 3 years and now wish I was involved sooner!! You do an outstanding job with both your written and verbal commentaries! I really look forward to the daily chats and the Wraps.”
"MarcRas" - Trading Room2014-06-03
“I appreciate your mails more than you can ever know..over the years you have given me a feeling of understanding of something I truly wanted to understand..........from the old AOL chat rooms ( we loved it when you popped in ) thru today you remain the best of the best at teaching us old dog's how to survive these markets.........from the bottom of my heart I thank you for what you do and the way you do it”
Billy Elmore Grand Bay, AL2013-01-03
“Jack was one of the few that warned us of a downturn that happened a week or so ago and he's correct again. He's one of the most important financial advisers to listen and pay heed to regarding markets. When Jack speaks, I listen! I wish others were as honest as Jack. I've gotten numerous emails saying it's crazy not to invest in this downturn, wanting people to pay them $50 for five stocks that will do great. Ha! Jack is one of the very few I trust, and I believe he really cares about the common man's welfare more than the almighty Dollar.”
Anne Hargrove - WA2012-11-12
“For sure the risk management in Jack's world is priceless.”
"Mary" - Trading Room2015-08-10
“"I'd like to thank you profusely for all the money I have made as a result of using your service and sage advice. I have made a TON of money using your service. I have learned a great deal about technical analysis from you, and it really works. I recommend your service to everyone I know. You are a great guide during these challenging times, and I highly value your thoughts and opinions. Keep up the GREAT work!"”
Alex NasonStamford, CT3/31/11
“"Jack is BY FAR the only one of the millions of analysts whom I have been able to "connect" with in the way that he explains everything. He really gets the message across, and the best part is his results speak far more than anything else!"”
Roberto AlvarezMesquite, TX03-21-11
“Being conservative in this crazy market to me is a smart thing and I think those of us with you feel the same. I'm thankful to have found your service and only wish I had done so years ago instead of months ago! Every market gives us new things to learn and you are a great teacher . . . . with your help I'm up for the year so far.”
"Cowgirl" - Trading Room2015-08-10
“Jack brings passion for educating the individual trader about technical analysis. He wants to give you the edge he sees the pros using: a deeper understanding of technical indicators."”
David MorrowEditor-in-Chief, TheStreet.com
“I've been a member for a little over 3 months now and have to say that I am incredibly impressed with your insight into the stock market. You've taught me some very important lessons with respect to patience, appropriateness and emotion. I pretty much rely on your alerts for trading (and usually regret when I don't!) - and your comments on the market are truly invaluable.”
Nick GudkaCulpeper, VA02-14-11
“Jack, I used to run a trading desk on Wall Street and only wish I had a technical guy of your expertise. You are extremely good at what you do."”
Michael DoctorHolmdel, NJ6/12/09
“I have taken many advisory letters over the past 30 years, but I have NEVER taken a letter which has the depth, common sense and knowledge which you display."”
Rob LedbetterHenderson, NV
“You are freaking phenomenal, Jack! Thanks for a steady hand at the wheel in a time of great uncertainty."”
Everton BaileyGreenacres, FL5/19/09
“My profit on your last 2 trades already paid for a year of SwingTradeOnline. My account is up more than 20% since I joined the service 4 months ago. Your analysis has made the difference."”
Marilyn OttGreenwood Village, CO12-16-10
“I joined up a few months ago, and during that time, Jack has been consistently and repeatedly correct with market fluctuation predictions, based on his expertise with the chart analysis. Jack's priority is safety for his subscribers, and that has been a critical key particularly in this kind of market. I feel very confident in following Jack's buy and sell recommendations."”
Joe PowellLaguna, CA
“Mr. Steiman, as I have followed him over the many years, has been quite informative and sometimes downright brilliant in his uncanny ability to pick a market and the stocks within."”
Roland AudetSatellite Beach, FL
“Jack, I've been very impressed with your work. Smart calls, superb analysis, great market knowledge and an appropriate 'cautious optimism' summarize for me your take on the market and your work. Keep up the great effort!"”
Guy NapierHinsdale, IL3/22/10
“Before signing up, I had been told that Jack was one of the best. I have now discovered that for myself. Over the four months I have been a subscriber, the value of my investment account has increased 140% thanks to Jack! In my investing experience, an incredible achievement!! His regular updates, honesty, personal touch, genuine interest in the well-being of subscribers, and trading knowledge and skills are unmatched in my experience with other trading services. I'm looking forward to a long association with SwingTradeOnline. Keep up the good work."”
James TurnerSun City, AZ6/23/09
“Thanks for the thoroughness and persistence of the analysis. Nothing like it anywhere I know of." ”
Steve KruvantSouth Orange, NJ10/6/09
“I just want to THANK Jack for providing information that a new investor/swing trader can use, understand and trust. Now when time is limited I only need to read SwingTradeOnline."”
Robert MaherPort Charlotte, FL
“Jack, thanks for the guidance along the way. You have been spot on. Many thanks." -Trader1 | "Excellent commentary, thanks!" -Eddy | "Wonderful addition to your service. Great job!" -Richie | "Thanks for comments on stops & chasing weakness. I've been trading 2 yrs, lost thousands prior to joining SwingTrade! Thanks for all your help." -Toby”
Comments In & About New Chat RoomChat Room4/27/10
“Jack, what a great reader of the market you are. Never too brash, just looking for opportunites whatever the market does. I really appreciate your comments and they help me to understand what is going on.”
Roy HookerBrisbane, Queensland, Australia6/10/10
“Jack Steiman is excellent on short- to intermediate term timing for swing trades. For people looking for short-term swing trades both long and short as well as market direction, there's nobody better than Jack on the Web!"”
Al SlaytonLos Angeles-based financial advisor and subscriber
“Educator, investor, trader ... Jack Steiman shows you how to move from emotion to "appropriateness."”
David PennTraders.comJanuary 2007
“I look forward to reading your views each trading day. They seem to be the only steady, rational, based on experience opinions I have access to. There is so much 'doom and gloom', 'the apocalypse is imminent' fear mongering out there to wade through that, 'When all around you are losing their heads', I find your choice of wording, the tone of your daily emails very concise and helpful. All I want is a clear-eyed view, a steady hand on the wheel and the facts as I can digest them from someone whose opinion I've come to respect.”
N. HarrisToronto, ON8/23/11
“Jack, I've learned more from you in the past few months than in all the previous 10 years I've been studying the market from other sources, especially on the subject of divergence and sentiment - probably the two most powerful technical indicators. Very educational!”
Dean DunhamEnglewood, CO09-16-11
“"Jack, thanks for all your help. Because of your advice, I no longer feel like I'm driving down the Garden State Parkway with a blindfold on!"”
Gary KlophausPipersville, PA10/24/11
“"I can't believe how thoroughly you run the service. It is FABULOUS! I am way up since I joined in April. Thank you, thank you Jack from my family of four!!!"”
Tim ReynoldsDanville, CA10/25/11
“I've been a member of your service since May 2011, and I want to thank you for the valuable education that you provide. I've tried other services, but they don't provide the incredible level of analysis that you do. I now successfully trade less on hope and more on reason. The webinar is vital - I need to hear your voice of reason. ”
Kim H.Palatine, IL12-05-11
“I've tried different services over the years and I have never had such a solid service as you provide. I enjoy the market comments and the trading discipline that you talk about. ”
Ricky JaramilloHolualoa, HI2012-03-28