Jack Steiman...A person that I read every day

Eveything I know about trading started with Jack Steiman. He uses moving averages in a lot of his analysis...but his charting is better then everybody's (and he doesn't pay me to say that!) Anyway, here's a little piece of a piece that he wrote about equities that you can take a look at:

There are many who are already declaring the bull market off the March lows dead. That may very well be true, but don't fool yourselves in to thinking it's a done deal either. It is normal and expected for markets to test down to those 50-day exponential moving averages from time to time. That allows for the oscillators to unwind and for any negative divergences that formed to be wiped out. The higher you go in a bull, meaning the higher those MCAD's go, the odds increase that, at some point, they won't be able to keep up with price thus creating the negative divergences. You can't have those hold on forever thus the selling that takes place.

It does not mean that all is lost despite the increasing bad news on the economic front. The battle will now rage between the 20-day and 50-day exponential moving averages for a while and how that is resolved will tell us if the bull is truly dead or if its just taking some well deserved time off to continue and unwind things to the oversold level on the daily's.

If we get oversold on the daily charts and we hold on to the 50's then you have to think things aren't nearly as bad as they looked this week, especially the past few days. On the other hand, if the move up is weak and labored, we have to consider the fact that the bull is about to end. It is totally unclear which way it'll break because if you study the daily charts, they are almost oversold now.

We are truly at a crossroads here. It'll be no fun for folks if we lose those 50's because that opens the door for another leg down in the bear market and this would have been nothing more than a rally in that bear market. It won't take long to get our answer folks. The battle between the 20's and 50's is not a wide and lose one. It's tight. The S&P 500 20 is at 1043 with the S&P 500 50 at 1017. There is also gap at 1017. This is an additional buffer for the bulls, but a death knell for this market should it get taken out with force. Patience as we learn the truth.