Top Advisors Corner

Jack Steiman: Overbought Short-Term Near the Breakout

Jack Steiman

Jack Steiman


Overall, the action was solid today. The S&P 500 neared 2119, approaching a breakout, but it wasn't meant to be.  One the 60-minute short-term index charts hit 70 RSI, that was the end of the rally for the day. The market pulled back over the last 20 minutes.  That doesn't mean a breakout won't happen as the daily index charts are looking better, confirming price. However, the weekly and monthly charts remain terrible.  So the market may need a small down-day to unwind those overbought charts without too much price erosion before it can turn back up and complete the breakout.


We finally had good earnings from Intel Corporation (INTC) two nights ago. Actually it wasn't that great, but since numbers and expectations are being bought down, this could help other big reporters to come. INTC really didn't say anything good at all, except to not take things even lower in terms of expectations. The market applauded that, since so many others are taking down expectations. Weird, but we all know the market is really another word for Disneyland, so the bulls will take it. This evening Netflix, Inc. (NFLX) is flying, while SanDisk Corp. (SNDK), another semiconductor stock, is falling some.

On the S&P 500, the two key levels are 2045 and 2119. We got close today to 2119, but pulled back from overbought. If, and when, we break above 2119, with force, the bulls will be in full control of the overall action. Bad economic news from around the world keeps coming in. We saw terrible growth numbers here at home from the key New York manufacturing report, and from Asia last night. Bad is good, it appears, since all of this means more global stimulation and low rates for forever. As long as the numbers are weak, the market has a very strong chance to break out. Rates are the key. They have been and will continue to be. One day at a time as we watch to see whether the S&P 500 can make 2119 disappear in the rear-view mirror.

Jack Steiman is author of SwingTradeOnline.com, a live Trading Room of his swing trades and technical market analysis. A free 15-day trial to Jack’s Trading Room is available at www.SwingTradeOnline.com