Customer Service 1 (888) 261-2693
Advanced Search

The Market Is Ready to Sleep Until Noon

By Jeff Clark
Thursday, August 20, 2009

The stock market today is like a 7-year-old child on a sugar high. Just when you think it's time to put the kid to bed, the chocolate bar he sneaked out of the candy jar has him bouncing off the walls.
 
You know he woke up early, ran around all day, and was showing signs of exhaustion just a few moments ago... but you don't know yet what is keeping him going. Is there ever a more frustrating time for a parent?
 
So it is with the stock market...
 
Stocks woke up early in March. They ran around the playground and played on the jungle gym for nearly five months. Last Monday, after a nearly 200-point decline, it was bedtime. The market's eyes were closing and it looked like it was "nighty-night" time for stocks.
 
Then, the chocolate kicked in.
 
Over the past two days, stocks have regained nearly all of Monday's losses and they're ready to head out to the playground again. But, as every parent knows, jungle gyms at midnight are a bad idea. The kid needs to sleep.
 
Every technical analyst knows stocks are overbought. We know it's nighty-night time for the market. But stocks keep jumping on the bed. We can yell and scream about how late it is and how you need to go to sleep or risk stunting your growth. But the 7-year-old child only cares about the thrill of the moment.
 
Parents though, like experienced market traders, know that sleep eventually comes.
 
It's midnight for the stock market. You can bet stocks are ready to fall asleep or you can bet they'll have the energy to party until dawn. One bet is based on logic and common sense, and one bet is based on the endurance of a sugar-high.
 
A healthy market needs its sleep. It needs to rest in order to store energy for the next growth spurt.
 
What we have today is an unhealthy market. It's a belligerent 7-year-old child on a sugar rush. And it's going to crash and sleep until noon at some point.
As a parent of a 7-year-old child, I'm confident fading the sugar rush is a good move.
 
Do not buy into this market. It's the equivalent of giving a child a sugar cube at bedtime. Yes, it'll probably bounce a bit higher. But eventually, it'll crash and burn.
 
Best regards and good trading,
 
Jeff Clark




In The Daily Crux Recent Articles
Market Notes
Solar leader First Solar getting crushed on accounting worries and declining margins... now at four-month low.
 
China rebounds overnight... up 4.5%.
 
Natural gas trading... near seven-year low.
 
Big Pharma leader Wyeth reaches another new high... up 26% this year.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
Silver 28.60 +2.4% +53.6%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 18.01 -7.1% -19.8%
Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

World ETFs
Symbol Price
Change
52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
Real Estate 55.32 +0.1% +25.0%
Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%