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QQQQ News Fed A Non Event.....

Wednesday, January 26, 2011 7:12 PM

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News for 'QQQQ' - (Fed A Non Event.....)

Jan 26, 2011 (AdviceTrade via COMTEX) -- by Jack Steiman,
http://www.SwingTradeOnline.com an AdviceTrade.com publication

Someone needs to enlighten me as to why many think the fed was going to begin
speaking about, or hinting at, raising rates. The economy is the stock market.
The stock market is rising, based on liquidity from the fed. Raise rates, and
the liquidity supporting Qe2 goes away. So again, I don't get why people thought
he would begin speaking about raising rates. It's not going to happen in 2011.
If the stock market falls we go in to a double dip as the real economy is not
recovering. It's supported by printed dollars.

Again, based on the real world, you will not hear a word about raising rates
this year, and probably well beyond that. Now, if the fed is interested in
killing wealth and the economy, he'll hint at it. Until then. forget about it
folks. As long as he is continuing with this process of free and easy money,
there is no bear market in sight. Can't happen. Won't happen. So after he made
his announcement the market meandered about like a lost soul looking to find its
way. This way and that way, up and down. Nothing from nothing overall as it
should have been.

The market is not going to blast off on good news from the fed as it's already a
known entity. It would only collapse on the wrong words discussed above, meaning
hinting at rate increases to come in the near future. When all was said and
done, the fed was the non-event that it will be for the rest of 2011. Bears
don't like it. Can't blame them, but it is what it is.

The market was really interesting today. It opened up flat to slightly up, and
after a few attempts by the bears to sell it off, the bulls found a way to clear
1296 on the S&P 500. Got right near 1300 intraday before once again closing at
the old highs of 1296. Solid action at overbought once again. The bears are
finding it very difficult to find a catalyst to move things lower. Bull markets
stay overbought longer than bear markets stay oversold. Always been that way and
probably always will be.

The financials were a bit weak today as Goldman Sachs (GS) struggled once again
off their poor earnings report. It's a bit of an anchor for this sector right
now, but there have been a few not so great earnings report out of this area
over the past week, or so. The good news is that overall the financial sector is
holding up quite well, which is allowing the market to continue to grind higher.
It is not acting in any way, shape, or form, like a bearish sector any more,
even though the earnings weren't great. The market is giving this beaten down
laggard of a sector a pass for this quarter. It's trying to see if they can
start to get their act together.

I feel strongly that if the majority do not get going by their next report, they
will start to be a laggard once again. But for now there are no troubles in this
area. With these stocks hanging in the market was able to hold on to some gains
at the close. The Nasdaq out performed as those stocks are the most beaten down
lately due to their frothy nature, thus, the most oversold rose the best today.
Solid day for the bulls once again.

The stock market lesson is clear by now to most of you. Actually I hope to all
of you. You do not short a market just because it is overbought. No excuses for
doing that. That's not a true sell signal by any means. it's only saying that a
pullback will have to occur, but how can you safely play that? When a bull
market is confirmed you won't get a pullback that is down every day, nor can you
honestly say when the selling will be most intense. It's all guess work because
you are playing against the trend. That's something no one should ever really
do. Stick with the trend with the understanding that getting strong moves higher
aren't as easy as we'd like, but if you're patient enough you can do quite well.
The key is to buy stocks that have had their daily charts unwind to oversold,
especially on their stochastic's, meaning at, or below, 20.

Strong stocks usually will shortly turn up once their stochastic's get oversold
from previously overbought conditions. You can't time it exactly, and thus, you
need to be prepared to be down on your plays short-term but ultimately, they
usually turn higher in time. If you are buying stocks that are still overbought,
or are just turning down from overbought, you are likely to struggle more than
you'd like to. Not every play can work out, but when the daily index charts are
flashing 70, or higher, on their RSI's it is likely the market will not blast
higher, if at all, therefore, you must buy individual stocks that can move up
against the market, or at least hang in there on the bad days. Also, avoid the
frothy plays, meaning the super high P/E stocks until things are safer on the
daily index charts.

At some point things will snap, but until we see the reversal stick, you can
stay long, and buy not more than 30% long, would be my suggestion. Don't be a
hero, or get greedy, because if you're overly involved when the real selling
does hit to unwind, you won't be liking things very much from a financial
perspective. Lose the greed, and remember the lesson of appropriateness. As long
as the earnings are solid overall, and if the economic reports keep coming in
nicely, it won't be terrible even when the better selling period comes along.
Stay in, but don't overdo it.

Peace,

Jack

Jack Steiman is author of SwingTradeOnline.com (http://www.swingtradeonline.com).
Former columnist for TheStreet.com, Jack is renowned for calling major shifts in
the market, including the market bottom in mid-2002 and the market top in
October 2007. Sign up for a Free 21-Day Trial to SwingTradeOnline.com!
(https://www.swingtradeonline.com/reg/AT)


By Jack Steiman (www.SwingTradeOnline.com)

URL: swingtradeonline.com


(C) 2011 AdviceTrade, Inc. All rights reserved.

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Source: Comtex Wall Street News