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Expected Market Pullback Has Likely Begun!

  • Written by Syndicated Publisher No Comments Comments
    December 10, 2014

    We have been noting for several weeks that the market was short-term overbought and quite likely to experience at least a short-term pullback of 3 to 5%.

    Last week our short-term technical indicators triggered a short-term sell signal, and this week it looks like that pullback is underway.

    Wall Street and the big program-trading firms have managed to hold the Dow up more than the rest of the market, helping keep the majority of investors (who only look at the Dow as an indication of market strength), happy.

    However, the Dow was down 150 points intraday yesterday and closed down 106 points, while the NYSE Composite, which topped out two weeks ago, rallied back to a lower short-term high last week and declined yesterday to a lower low.

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    There were more than enough catalysts blamed for the decline yesterday, not the least of which was the further plunge in the price of oil.

    120814d

    There was also the report that China’s exports in November missed expectations , rising 4.7% versus the consensus forecast of 8%. And that Japan’s economy may be mired in a deeper recession than thought. Its previously reported 3rd quarter contraction of negative 1.6%, was revised down to 1.9%.

    But we believe the short-term overbought condition of the market and short-term sell signals was the main catalyst and will result in a pullback regardless of surrounding conditions.

    Also involved may be:

    Short-term market patterns.

    The ‘monthly strength period’, the last two trading days of a month and the first four trading days of the next month, was due to end last Thursday.

    The next pattern is for the week after the monthly strength period to be negative. Also, the week before the monthly expirations week, which this week is, also tends to be negative.

    The big question is whether it will be just a brief pullback to the 50-day moving averages, or the beginning of something worse.


    To read my weekend newspaper column click here:  Are We in Another 1990s Style Super Bull Market-

    Subscribers to Street Smart Report:

    In addition to the charts and signals in the ‘premium content’ area of this blog, the new issue of the newsletter will be out tomorrow in your secure area of the Street Smart Report website.

    Images: Flickr (licence attribution)

    About The Author – Sy Harding, Street Smart Report

    Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

    It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.

    It provides two model portfolios as guides. One is based on ourSeasonal Timing Strategy, one on our Market-Timing Strategy.

    In depth updates are provided every Wednesday, with interim ‘hotline’ updates every time we make a trade. An 8-page traditional newsletter Street Smart Report is provided on the website every 3 weeks, in pdf format for viewing or printing out.

    There is the Street Smart School of online technical analysis ‘seminars’,commentaries to keep you ‘street smart’ about Wall Street, and much more. 

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