This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Inflating Market Bubble Not Quite Ready to Pop

NEW YORK (TheStreet) -- The major equity averages began 2014 with three down days, followed by a strong rebound on Tuesday. This resiliency simply means that the market's inflating bubbles are just not ready to pop. This is not surprising, as pivots from my proprietary analytics have kept volatility trendless.

The S&P 500 ended 2013 at 1848.36, up 29.6% for the year. It set a new all-time intraday high at 1849.44 on the last day of the year. The warning is that the S&P began 2014 below my monthly pivot at 1847. Given this dynamic, the market needs a positive reaction to Friday's employment data for December. A weekly close above 1847 would mean another round of new highs -- if we do not see them Wednesday or Thursday first.

The Dow Transportation Average has been a market stabilizer by staying between its longer-term pivots despite a negative divergence on its daily chart. Transports have stayed above their semiannual pivot at 7245 after slipping below their second semiannual pivot at 7376 and their monthly pivot at 7327. Transports ended 2013 at 7400.57, up 39.4% -- the best performer among the five major averages. The transportation average set its all-time intraday high at 7410.25 on the last day of the year.

The daily chart for the transportation average shows a declining 12x3x3 daily slow stochastic reading. But the transports average stayed above its 21-day simple moving average at 7243.41 on Monday and Tuesday. A close below the 21-day SMA would be a short-term negative, putting the focus on the 50-day SMA at 7175.12. A close below the 50-day SMA would indicate risk to the 200-day SMA, rising at 6580. Transports have been above the 50-day SMA since Oct. 10, 2013, and above their 200-day SMA since Dec. 10, 2012.

Courtesy of MetaStock / XENITH

The Dow Industrial Average, Nasdaq and Russell 2000 have not yet tested value levels or risky levels yet this year, as choppy trading continues.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $125.16 -0.96%
FB $83.03 -0.20%
GOOG $552.93 0.16%
TSLA $191.13 0.29%
YHOO $44.99 0.09%


DOW 17,871.65 -104.66 -0.58%
S&P 500 2,078.14 -8.10 -0.39%
NASDAQ 4,925.5860 -21.8550 -0.44%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs