The Dow retreated 139 points today despite continued growth in sales.
Fundamentals
Better than expected sales data today failed to overcome continued bad news from the Euro zone. This, along with the fact there is but one more full trading day before the New Year long weekend, caused investors to rush back for the safety of bonds once again, depressing bond yields strongly across the board. However, with the current trend of better than expected economic performance, we could see a very encouraging first quarter of 2012 as long as the Euro doesn't blow up. Yes, it is still a matter of time the Euro mess gets resolved painfully in my opinion.
Technicals
The Dow retreated today as I have expected on retreating volume as it retests the integrity of the recent breakout. In fact, the Dow could remain around this area for the rest of the week as volume retreats and investors get ready for the new year. It seems like Santa Claus isn't visiting the market this year afterall.
For now, the Dow remains in short term bull trend within an intermediate term neutral trend and primary bull trend.
Final Week of 2011...
Welcome back from the Christmas Holiday!
This is the final week of 2011 and is therefore another holiday shortened week with market closing early on Friday ahead of the New Year. The market is expected to trade with low volume and therefore fairly volatile this week with focus on Tuesday's Consumer Confidence and Thursday's Jobless Claims as well as Chicago PMI. Last week has been a week of great economic numbers, allowing the Dow to make a strong topside breakout of the 12,200 zone. However, the breakout happened on such low volume it is hard to see a strong trend coming out of it unless we see some strong followup this week, which is unlikely to happen on strong volume either. As such, it is still time to be cautious and not to be too enthusiastic on jumping in on the bullish wagon yet.
This is the final week of 2011 and is therefore another holiday shortened week with market closing early on Friday ahead of the New Year. The market is expected to trade with low volume and therefore fairly volatile this week with focus on Tuesday's Consumer Confidence and Thursday's Jobless Claims as well as Chicago PMI. Last week has been a week of great economic numbers, allowing the Dow to make a strong topside breakout of the 12,200 zone. However, the breakout happened on such low volume it is hard to see a strong trend coming out of it unless we see some strong followup this week, which is unlikely to happen on strong volume either. As such, it is still time to be cautious and not to be too enthusiastic on jumping in on the bullish wagon yet.
Optimism Ahead of Christmas
The Dow closed higher by 61 points today as most economic data today beat consensus.
Fundamentals
It was truly a day jammed packed with economic data today. Even though GDP didn't turn out as well as expected, the much better than expected Jobless Claims, Consumer Comfort, Consumer Sentiment and Leading Indicators quickly took the market into the green and held it there for the rest of the day. Today's data continue to paint the picture of economic recovery particularly in the area of jobs and consumerism. Trading volume was also very healthy today, setting the market up for a positive Christmas week.
Technicals
The Dow is once again at the doorstep of the 12,200 points resistance zone. However, this time round, the Dow has a real chance at breaking the resistance zone at last and that might happen next week.
For now, the Dow remains in short term neutral trend within an intermediate neutral trend and primary bull trend.
Fundamentals
It was truly a day jammed packed with economic data today. Even though GDP didn't turn out as well as expected, the much better than expected Jobless Claims, Consumer Comfort, Consumer Sentiment and Leading Indicators quickly took the market into the green and held it there for the rest of the day. Today's data continue to paint the picture of economic recovery particularly in the area of jobs and consumerism. Trading volume was also very healthy today, setting the market up for a positive Christmas week.
Technicals
The Dow is once again at the doorstep of the 12,200 points resistance zone. However, this time round, the Dow has a real chance at breaking the resistance zone at last and that might happen next week.
For now, the Dow remains in short term neutral trend within an intermediate neutral trend and primary bull trend.
Welcome To Christmas Week!
The Dow retreated 100 points today to a bad start to Christmas week.
Fundamentals
Investors sold off today as a wave of pessimism swept across global markets from Asia on uncertainty surrounding the death of North Korean leader. Uncertainties surrounding the stability of the region under the regime of the new young leader caused investors to take to bonds once again. Bond yields declined across the board to recent lows but strangely, options traders seem to be more optimistic today despite the drop, taking total equities put call ratio below par in favor of call options. However, one day of optimistic options trading doesn't mean anything. We can expect the rest of the week to be a low volume, unenthusiastic one ahead of the Christmas holiday.
Technicals
The Dow made a decisive and dangerous drop below the 30MA and 12,000 support zone today which completed an intermediate term head and shoulders formation. Such a formation puts the odds to downside with immediate support at about 11,600 points. Failing which, we could expect some new lows with intermediate neutral trend turning bearish. Santa Claus really seems to be absent this year...
For now, the Dow turns a short term bear trend within an intermediate neutral trend and primary bull trend.
Fundamentals
Investors sold off today as a wave of pessimism swept across global markets from Asia on uncertainty surrounding the death of North Korean leader. Uncertainties surrounding the stability of the region under the regime of the new young leader caused investors to take to bonds once again. Bond yields declined across the board to recent lows but strangely, options traders seem to be more optimistic today despite the drop, taking total equities put call ratio below par in favor of call options. However, one day of optimistic options trading doesn't mean anything. We can expect the rest of the week to be a low volume, unenthusiastic one ahead of the Christmas holiday.
Technicals
The Dow made a decisive and dangerous drop below the 30MA and 12,000 support zone today which completed an intermediate term head and shoulders formation. Such a formation puts the odds to downside with immediate support at about 11,600 points. Failing which, we could expect some new lows with intermediate neutral trend turning bearish. Santa Claus really seems to be absent this year...
For now, the Dow turns a short term bear trend within an intermediate neutral trend and primary bull trend.
Dow Continues Congestion...
The Dow dropped 162 points today as global markets sold off once again on macro uncertainty.
Fundamentals
Investors sold off globally today as results coming out of the Euro summit over the weekend failed to please investors in a big way. Investors rushed back for the safety of bonds, depressing bond yields significantly. Traders also rushed back for put options for the first time in weeks, taking total equities put call ratio above par in favor of put options trading. Indeed, worry in the Eurozone is once again taking over the market with the fading memory of much better than expected US economic data released in the first week. Once again, the market is going to ebb and flow with news from the Eurozone, at least for this week, creating a volatile trading week.
Technicals
The Dow continued its super congestion between the 12,200 and 12,000 points level today. The Dow has been trading largely within this region for the past 8 sessions with the last 3 sessions touching both the upper and lower limit intraday. Once again, the 12,200 points level proved itself to be an extremely strong resistance level. If the Dow fail at the 12,200 points level once again, it will complete an intermediate double top formation with support at around the 11,200 points area once again.
For now, the Dow turns a short term neutral trend within an intermediate neutral trend and primary bull trend.
Fundamentals
Investors sold off globally today as results coming out of the Euro summit over the weekend failed to please investors in a big way. Investors rushed back for the safety of bonds, depressing bond yields significantly. Traders also rushed back for put options for the first time in weeks, taking total equities put call ratio above par in favor of put options trading. Indeed, worry in the Eurozone is once again taking over the market with the fading memory of much better than expected US economic data released in the first week. Once again, the market is going to ebb and flow with news from the Eurozone, at least for this week, creating a volatile trading week.
Technicals
The Dow continued its super congestion between the 12,200 and 12,000 points level today. The Dow has been trading largely within this region for the past 8 sessions with the last 3 sessions touching both the upper and lower limit intraday. Once again, the 12,200 points level proved itself to be an extremely strong resistance level. If the Dow fail at the 12,200 points level once again, it will complete an intermediate double top formation with support at around the 11,200 points area once again.
For now, the Dow turns a short term neutral trend within an intermediate neutral trend and primary bull trend.
Dow Gains Despite Weaker Sales
The Dow closed higher by 52 points today despite poorer than expected sales data.
Fundamentals
Sales data turned in largely worse than expected today, putting pressure on a market that has just found some momentum from last week's slew of better than expected data. However, that didn't stop investors from continuing their return back to equities as bond yields continue to rise and options traders continue to trade in favor of call options in a pattern that is predominant during largely bullish markets. All of these continue to give the market a largely optimistic sentiment despite obvious volatility. The next big number to look forward to would be Thursday's Jobless Claims.
Technicals
The Dow is once again right at the 12,200 points resistance with obvious selling pressure throughout the day, taking the Dow off the 12,200 point level itself. With the Dow in short term overbought condition, we may see yet more struggling around this area before it muster enough energy for a breakout but odds now favor a topside breakout in continuation of the volatile bull trend.
For now, the Dow turns a short term bull trend within an intermediate neutral trend and primary bull trend.
Fundamentals
Sales data turned in largely worse than expected today, putting pressure on a market that has just found some momentum from last week's slew of better than expected data. However, that didn't stop investors from continuing their return back to equities as bond yields continue to rise and options traders continue to trade in favor of call options in a pattern that is predominant during largely bullish markets. All of these continue to give the market a largely optimistic sentiment despite obvious volatility. The next big number to look forward to would be Thursday's Jobless Claims.
Technicals
The Dow is once again right at the 12,200 points resistance with obvious selling pressure throughout the day, taking the Dow off the 12,200 point level itself. With the Dow in short term overbought condition, we may see yet more struggling around this area before it muster enough energy for a breakout but odds now favor a topside breakout in continuation of the volatile bull trend.
For now, the Dow turns a short term bull trend within an intermediate neutral trend and primary bull trend.
Dow Made 7% Week...
What a week is was last week as US economic data turned in consistently stronger than expected, giving the market a much needed boost. In fact, the Dow made a huge 7% run last week on a week-on-week basis, which is totally phenomenal. This took the Dow once again to the doorway of the 12,200 points resistance zone, which it failed to break last month after multiple testing, in a slightly short term overbought condition. With a quiet week ahead, we might see the market succumb to a bit of selling pressure like we saw last Thursday and Friday before it muster the kind of strength needed for a topside breakout. The Dow looks very much set in a volatile uptrend with huge ups and downs, pushing each peak slowly upwards until perhaps a resolution of the Eurozone issues. Investors definitely ran back into the safety of bonds last Friday, depressing bond yields across the board but trader sentiments continue to be more positive than negative as total equities put call ratio remained below par for 5 straight days, something which we have not seen since the July correction. All in all, I do see a topside breakout coming up, perhaps next week?
Dow Goes Sideways As Expected
The Dow closed marginally higher by 32 points today as expected on better than expected economic data.
Fundamentals
Today's slew of economic data turned in largely better than expected, especially the Consumer Confidence number, leading to a largely optimistic day. However, short term profit taking quickly set in later in the day and took the market off its best levels for the day. That did not stop investors from moving back into equities from bonds lifting bond yields across the board once again and options traders surprisingly kept total equities put call ratio below par in favor of call options trading for a second straight day in a row, which is something we hadn't seen in a while. It is now a battle between US economic data and news from the Eurozone as every better than expected economic data lifts the market while news from the Eurozone puts pressure on it creating the kind of volatile market condition the US market is going through right now. A better than expected ISM Index and Jobs report later this week would certainly help lift the market for the short term.
Technicals
As mentioned in my email to paid subscribers yesterday, I expected the Dow to make a few sideways or even slightly negative days these few days following Monday's rally and so it happens. The Dow made a largely sideways day today along the 16,000 resistance zone, which means that it continues to be in danger of turning downwards from here into some nasty lows. As such it is still time to be cautious. A topside breakout will continue the reversal into a longer term volatile bull trend while a bottomside breakout will almost certainly reverse the intermediate trend into a bearish one which could ultimately threaten the primary trend itself.
For now, the Dow remains in short term neutral trend, intermediate neutral trend and primary bullt rend.
Fundamentals
Today's slew of economic data turned in largely better than expected, especially the Consumer Confidence number, leading to a largely optimistic day. However, short term profit taking quickly set in later in the day and took the market off its best levels for the day. That did not stop investors from moving back into equities from bonds lifting bond yields across the board once again and options traders surprisingly kept total equities put call ratio below par in favor of call options trading for a second straight day in a row, which is something we hadn't seen in a while. It is now a battle between US economic data and news from the Eurozone as every better than expected economic data lifts the market while news from the Eurozone puts pressure on it creating the kind of volatile market condition the US market is going through right now. A better than expected ISM Index and Jobs report later this week would certainly help lift the market for the short term.
Technicals
As mentioned in my email to paid subscribers yesterday, I expected the Dow to make a few sideways or even slightly negative days these few days following Monday's rally and so it happens. The Dow made a largely sideways day today along the 16,000 resistance zone, which means that it continues to be in danger of turning downwards from here into some nasty lows. As such it is still time to be cautious. A topside breakout will continue the reversal into a longer term volatile bull trend while a bottomside breakout will almost certainly reverse the intermediate trend into a bearish one which could ultimately threaten the primary trend itself.
For now, the Dow remains in short term neutral trend, intermediate neutral trend and primary bullt rend.
Welcome Back From Thanksgiving!
Well, this year's Thanksgiving leaves little to be thankful for the stock market as investors and traders scramble for safety ahead of the holiday, leaving the market with the ugliest two weeks drop since the July correction. The Dow dropped a total of 4.7% during the short Thanksgiving week alone as investors rightfully stay away in case of any bad new arising from the Euro zone through the long holiday. Yes, the Euro zone continues to be the toxic of global markets and until the toxic is cleared (perhaps with the dissolution of the Euro?) with a painful and significant hit to world markets, I am afraid the market cannot find real strength even if the US economy continues to grow. Interestingly, investors actually started reallocating back into equities last Friday, raising bond yields across the board significantly. Perhaps bond yields are now low enough to consider taking some risk? On the weekly charts, the Dow still look barely hanging on to a bullish reversal pattern but another negative week this week will destroy the pattern and perhaps lead the market into new lows and a new intermediate bear trend. Yes, this is uncertain times that defies precise predictions. Two things are certain, volatility and a slight Bearish inclination in sentiments.
GDP Disappoints...
The Dow sunk by 53 points today as economic data turned in largely negative.
Fundamentals
US market was hit by a downwards Q3P GDP along with slower sales ahead of the discount week. Bargain hunting in the morning that brought the Dow back into the green took a hit on the FOMC minutes in the after which reinstated higher downside risk due to the European debt issue. Indeed, the European debt issue is an axe hanging over global markets right now and is an issue that almost every economists and financiers think will end with the desolution of the Euro. Investors certainly are cautious ahead of the Thanksgiving holiday, running back for the safety of bonds. Yes, Santa-Claus has failed to come so far. What the world needs is a quick resolution of the Euro issue so that repairs can start in the world markets rather than a prolonged agony that will almost certainly end up the same way. So, will a resolution of the Euro issue result in a global crisis? Well, I personally think the effect globally will be sharp and quick with prolonged effect mostly on the Euro side. However, no matter what happens, as a trader, I will continue to read the market and trade for profit no matter upwards or downwards... as long as it goes somewhere.
Technicals
It is a good thing that the Dow closed within yesterday's trading range otherwise I would have to put the 11,600 support area into question. For now, it is yet significant enough to call it a downside break. What the Dow does tomorrow will be very critical... will the support level hold?
For now, the Dow remains in short term neutral trend within an intermediate neutral trend and primary bull trend.
Fundamentals
US market was hit by a downwards Q3P GDP along with slower sales ahead of the discount week. Bargain hunting in the morning that brought the Dow back into the green took a hit on the FOMC minutes in the after which reinstated higher downside risk due to the European debt issue. Indeed, the European debt issue is an axe hanging over global markets right now and is an issue that almost every economists and financiers think will end with the desolution of the Euro. Investors certainly are cautious ahead of the Thanksgiving holiday, running back for the safety of bonds. Yes, Santa-Claus has failed to come so far. What the world needs is a quick resolution of the Euro issue so that repairs can start in the world markets rather than a prolonged agony that will almost certainly end up the same way. So, will a resolution of the Euro issue result in a global crisis? Well, I personally think the effect globally will be sharp and quick with prolonged effect mostly on the Euro side. However, no matter what happens, as a trader, I will continue to read the market and trade for profit no matter upwards or downwards... as long as it goes somewhere.
Technicals
It is a good thing that the Dow closed within yesterday's trading range otherwise I would have to put the 11,600 support area into question. For now, it is yet significant enough to call it a downside break. What the Dow does tomorrow will be very critical... will the support level hold?
For now, the Dow remains in short term neutral trend within an intermediate neutral trend and primary bull trend.
Welcome to Thanksgiving Week!
Welcome to Thanksgiving Week!
US market will be closed on Thursday with an early close on Friday for the Thanksgiving weekend, as such, it is going to be an extremely short trading week with low trading volume. And low trading volume week always mean a volatile week with relatively significant moves. However, the good news is that the volatility has traditionally been in the favor of the bulls on Thanksgiving week; This combined with the Dow and S&P500 both finding support at the top of their last neutral channel, increases the chances of a positive week this week. So far, Santa-Claus rally doesn't seem to happening this year... could it start this week?
US market will be closed on Thursday with an early close on Friday for the Thanksgiving weekend, as such, it is going to be an extremely short trading week with low trading volume. And low trading volume week always mean a volatile week with relatively significant moves. However, the good news is that the volatility has traditionally been in the favor of the bulls on Thanksgiving week; This combined with the Dow and S&P500 both finding support at the top of their last neutral channel, increases the chances of a positive week this week. So far, Santa-Claus rally doesn't seem to happening this year... could it start this week?
US Market Sells Off on Euro Slump
The Dow dropped 190 points today despite better than expected economic data.
Fundamentals
Investors sold off today during the final hour along with a slump in the Euro. Investors are certainly watching every news and development over at the Eurozone and would rush for safety at the very first sight of trouble. Today, the first sight of trouble is the slump in the Euro. A selloff in the Euro suggests a decline in confidence in the Eurozone which may reveal itself as some pretty nasty news in the near future. Having witnessed how such news from the Eurozone can affect the US market, it is no wonder why investors rushed back to the safety of bonds today, depressing bond yields across the board and why options traders rushed for put options, creating a spike in the total equities put call ratio in favor of put options trading.
Technicals
The combined effect of the Euro slump and the 12,000 points resistance resulted in today's retreat. Howdver, the retreat was a relatively mild one and resulted in a rising low supported by the 30DMA. As long as the Dow turn around tomorrow, it would still be in line for good topside breakout.
For now, the Dow remains in short term bull trend, intermediate neutral trend within a primary bull trend.
Fundamentals
Investors sold off today during the final hour along with a slump in the Euro. Investors are certainly watching every news and development over at the Eurozone and would rush for safety at the very first sight of trouble. Today, the first sight of trouble is the slump in the Euro. A selloff in the Euro suggests a decline in confidence in the Eurozone which may reveal itself as some pretty nasty news in the near future. Having witnessed how such news from the Eurozone can affect the US market, it is no wonder why investors rushed back to the safety of bonds today, depressing bond yields across the board and why options traders rushed for put options, creating a spike in the total equities put call ratio in favor of put options trading.
Technicals
The combined effect of the Euro slump and the 12,000 points resistance resulted in today's retreat. Howdver, the retreat was a relatively mild one and resulted in a rising low supported by the 30DMA. As long as the Dow turn around tomorrow, it would still be in line for good topside breakout.
For now, the Dow remains in short term bull trend, intermediate neutral trend within a primary bull trend.
Dow Retreats Slightly At 12,000 Again
The Dow retreated by 74 points today as resistance continues at the 12,000 points level.
Fundamentals
There were no economic data or news today to account for today's thinly traded drop, as such, today's drop should be one of short term technical profit taking. Long term bond yields dropped as some investors who do not think the market can stage a bullish breakout reallocate back into equities. This is a week of leading indicators and investors might also be cautious ahead of those numbers as economic data recently has started to become more volatile once again (see Stock Market Calendar).
Technicals
Indeed, today's market action is largely technical in nature with short term profit taking on last Friday's strong single day gain as well as resistance by the 12,000 points level once again. Indeed, the Dow is back up to the ceiling of the wedge formation it is currently caught in but the good news is that the sell-off at the 12,000 points level this time round is an extremely soft and unenthusiastic one on very low volume. This shows that the resistance might be weakening, thus increasing the chance of a topside breakout. Indeed, a wedge formation occurring along a nice up trend usually leads on to more highs.
For now, the Dow remains in short term bull trend, intermediate neutral trend within a primary bull trend.
Fundamentals
There were no economic data or news today to account for today's thinly traded drop, as such, today's drop should be one of short term technical profit taking. Long term bond yields dropped as some investors who do not think the market can stage a bullish breakout reallocate back into equities. This is a week of leading indicators and investors might also be cautious ahead of those numbers as economic data recently has started to become more volatile once again (see Stock Market Calendar).
Technicals
Indeed, today's market action is largely technical in nature with short term profit taking on last Friday's strong single day gain as well as resistance by the 12,000 points level once again. Indeed, the Dow is back up to the ceiling of the wedge formation it is currently caught in but the good news is that the sell-off at the 12,000 points level this time round is an extremely soft and unenthusiastic one on very low volume. This shows that the resistance might be weakening, thus increasing the chance of a topside breakout. Indeed, a wedge formation occurring along a nice up trend usually leads on to more highs.
For now, the Dow remains in short term bull trend, intermediate neutral trend within a primary bull trend.
Dow Caught In A "Wedge" Once Again
The Dow gained 112 points today on better than expected economic data.
Fundamentals
US market celebrated a much better than expected Jobless Claims and Consumer Comfort Index, getting off to a strong start, beat short term profit taking in the morning session to close higher. Jobless Claims unexpectedly made its lowest level since April, dropping to 390K from last week's revised number of 400K. Investors cheered to the news and reallocated strongly back from bonds as bond yields rose significantly across the board. However, general trader's sentiment still seems slightly negative as there was obviously short term selling into the strength and total equities put call ratio persisted above par in favor of put options trading. An above par total equities put call ratio always tells me that the market is still generally uncertain or bearish and can expect to meet all kinds of resistance, which we have witnessed so far. The US market is also caught in a wedge between bad news from Europe and good news on the economic data front with every positive data giving rise to a positive day and then something in Europe taking all that gains away soon. Indeed, until the European issue reaches a firm resolution, the market will not find a committed direction.
Technicals
Indeed, the Dow is literally caught in a "Wedge" formation right now. A Wedge formation is created when prices go sideways in a narrowing channel. The Dow is clearly caught in a wedge between the rising 30DMA and the 12,000 points level right now. Such formations suggest uncertainty in the market which we all know comes largely from the European side. However, the good thing is that such a "Wedge" or "Pennant" formation occurring along a rising price trend usually breaks out in the direction of its previous trend, which is upwards in this case, when the uncertainties get resolved. As long as the 30DMA level holds up, the short term bull trend isn't in much of a danger.
For now, the Dow remains in a short term bull trend, intermediate neutral trend and primary bull trend.
Fundamentals
US market celebrated a much better than expected Jobless Claims and Consumer Comfort Index, getting off to a strong start, beat short term profit taking in the morning session to close higher. Jobless Claims unexpectedly made its lowest level since April, dropping to 390K from last week's revised number of 400K. Investors cheered to the news and reallocated strongly back from bonds as bond yields rose significantly across the board. However, general trader's sentiment still seems slightly negative as there was obviously short term selling into the strength and total equities put call ratio persisted above par in favor of put options trading. An above par total equities put call ratio always tells me that the market is still generally uncertain or bearish and can expect to meet all kinds of resistance, which we have witnessed so far. The US market is also caught in a wedge between bad news from Europe and good news on the economic data front with every positive data giving rise to a positive day and then something in Europe taking all that gains away soon. Indeed, until the European issue reaches a firm resolution, the market will not find a committed direction.
Technicals
Indeed, the Dow is literally caught in a "Wedge" formation right now. A Wedge formation is created when prices go sideways in a narrowing channel. The Dow is clearly caught in a wedge between the rising 30DMA and the 12,000 points level right now. Such formations suggest uncertainty in the market which we all know comes largely from the European side. However, the good thing is that such a "Wedge" or "Pennant" formation occurring along a rising price trend usually breaks out in the direction of its previous trend, which is upwards in this case, when the uncertainties get resolved. As long as the 30DMA level holds up, the short term bull trend isn't in much of a danger.
For now, the Dow remains in a short term bull trend, intermediate neutral trend and primary bull trend.
Dow Rallies on European News
The Dow continued to struggle today on last Friday's disappointing Jobs Report but still managed to eke out a gain of 85 points by the end of the day.
Fundamentals
It was a largely negative day in the US market today as investors continue to exit on the poorer than expected Jobs Report last Friday. Bond yields continue to drop today as investors continue to move for safe harbors. However, the weakness didn't last long before investors and traders bought into news from Europe in the afternoon, bringing the market back into the black. Total equities put call ratio declined significantly as put options trading declined against call options trading as options traders reduce their hedges and downside speculation today. Indeed, every development in the European debt issue affects US stock markets almost instantaneously and it seems like it is going to take a major development to really trigger off a sustained rally here.
Technicals
Traders continue to buy into the reversal today on weakness, providing support once again around the 19,000 points area. However, volume was missing from today's market, making today's gain a pretty weak one. Good news is, nothing that happened over the past two trading days changed the reversal pattern. In fact, as long as the bull starts running again, we would be good to call an intermediate bull trend. The Dow is still in a healthy reversal pattern coming out of the volatile neutral trend and still very much set for a new bull leg.
For now, the Dow remains in a short term bull trend within an intermediate neutral trend and primary bull trend.
Fundamentals
It was a largely negative day in the US market today as investors continue to exit on the poorer than expected Jobs Report last Friday. Bond yields continue to drop today as investors continue to move for safe harbors. However, the weakness didn't last long before investors and traders bought into news from Europe in the afternoon, bringing the market back into the black. Total equities put call ratio declined significantly as put options trading declined against call options trading as options traders reduce their hedges and downside speculation today. Indeed, every development in the European debt issue affects US stock markets almost instantaneously and it seems like it is going to take a major development to really trigger off a sustained rally here.
Technicals
Traders continue to buy into the reversal today on weakness, providing support once again around the 19,000 points area. However, volume was missing from today's market, making today's gain a pretty weak one. Good news is, nothing that happened over the past two trading days changed the reversal pattern. In fact, as long as the bull starts running again, we would be good to call an intermediate bull trend. The Dow is still in a healthy reversal pattern coming out of the volatile neutral trend and still very much set for a new bull leg.
For now, the Dow remains in a short term bull trend within an intermediate neutral trend and primary bull trend.
Dow Meets Support
The Dow gains 178 points today as the market accumulates from the steep 2 days drop.
Fundamentals
The Dow gained on relatively thin trading today as ADP employment beat expectations, casting some optimism on Friday'r Jobs Report. Fed chairman's speech after 2pm also gave the market a little bit of a boost into the close. Even though it was a pretty big gain in the Dow today, investors didn't quite pour into the market the way they should on really strong days. Trading volume was light and bond yields rose insignificantly across the board suggesting that investors aren't reallocating back into equities much. In fact, options traders continue to keep total equities put call ratio above par in favor of put options trading. All in all, it was a really cautious rally today without much real enthusiasm. Indeed, analysts are expecting a worse Jobs Report on Friday and that kind of uncertainty surely cannot result in clear cut optimism just days before its release.
Technicals
Today's rally is mainly technical in nature as some traders accumulate around the 11,600 level, which was the seemingly unbreakable resistance level of the neutral channel of Aug to Oct. In fact, accumulation around this area can be a substitute for retesting the 30DMA for reversal confirmation, as long as it follows up tomorrow. So far, this new bull trend still looks set and remains healthy as long as the Dow remains above its 30DMA.
For now, the Dow remains in a short term bull trend, intermediate neutral trend within a primary bull trend.
Fundamentals
The Dow gained on relatively thin trading today as ADP employment beat expectations, casting some optimism on Friday'r Jobs Report. Fed chairman's speech after 2pm also gave the market a little bit of a boost into the close. Even though it was a pretty big gain in the Dow today, investors didn't quite pour into the market the way they should on really strong days. Trading volume was light and bond yields rose insignificantly across the board suggesting that investors aren't reallocating back into equities much. In fact, options traders continue to keep total equities put call ratio above par in favor of put options trading. All in all, it was a really cautious rally today without much real enthusiasm. Indeed, analysts are expecting a worse Jobs Report on Friday and that kind of uncertainty surely cannot result in clear cut optimism just days before its release.
Technicals
Today's rally is mainly technical in nature as some traders accumulate around the 11,600 level, which was the seemingly unbreakable resistance level of the neutral channel of Aug to Oct. In fact, accumulation around this area can be a substitute for retesting the 30DMA for reversal confirmation, as long as it follows up tomorrow. So far, this new bull trend still looks set and remains healthy as long as the Dow remains above its 30DMA.
For now, the Dow remains in a short term bull trend, intermediate neutral trend within a primary bull trend.
Dow Makes Best Month In 20 Years
US Market took a hit today with the Dow closing down by 276 points on short term profit taking.
Fundamentals
The Dow made the biggest monthly gain in nearly 20 years in October so far, leading to a sharp profit taking today despite better than expected Chicago PMI. The selling today was actually global as world markets were generally lower before US market open, leading US index futures sharply lower. That kind of selling along with the fact that the US market had an almost historical run this month and uncertainty surrounding the major economic data and FOMC to be released this week, led to an inevitable profit taking today. Bond yields were sharply lower across the board as bond prices rise on the return to bonds and total equities put call ratio surged way above par in favor of put options trading once again as traders hedge their positions in expectation of a pullback following such a strong monthly gain.
Technicals
Today's sell off was totally technical in nature and could set the stage for the retest of the 30DMA that I have been talking about for a while. Indeed, until we see a strong, successful, retest of the 30DMA, this reversal cannot be deem to be complete. However, taking a look at the monthly chart shows the Dow rebounding nicely and strongly off its 30MMA, which is already a strong mid term reversal. All in all, this means that on the technical front, the market is now mid term bullish inclined with a short term pullback to the 30DMA to be expected.
For now, the Dow remains in short term bull trend, intermediate term neutral trend and primary bull trend
Fundamentals
The Dow made the biggest monthly gain in nearly 20 years in October so far, leading to a sharp profit taking today despite better than expected Chicago PMI. The selling today was actually global as world markets were generally lower before US market open, leading US index futures sharply lower. That kind of selling along with the fact that the US market had an almost historical run this month and uncertainty surrounding the major economic data and FOMC to be released this week, led to an inevitable profit taking today. Bond yields were sharply lower across the board as bond prices rise on the return to bonds and total equities put call ratio surged way above par in favor of put options trading once again as traders hedge their positions in expectation of a pullback following such a strong monthly gain.
Technicals
Today's sell off was totally technical in nature and could set the stage for the retest of the 30DMA that I have been talking about for a while. Indeed, until we see a strong, successful, retest of the 30DMA, this reversal cannot be deem to be complete. However, taking a look at the monthly chart shows the Dow rebounding nicely and strongly off its 30MMA, which is already a strong mid term reversal. All in all, this means that on the technical front, the market is now mid term bullish inclined with a short term pullback to the 30DMA to be expected.
For now, the Dow remains in short term bull trend, intermediate term neutral trend and primary bull trend
Economic Data Disappoints...
The Dow took a hit today as economic data once again turned in disappointing, closing downwards by 207 points.
Fundamentals
Just when investors and traders have mustered enough confidence in the trend of recovering economic data, almost all economic data today turned in disappointing, leading to a selloff. Both sales data today turned in worse this week with Consumer Confidence taking an unexpectedly huge hit. Even the increase in Investor Confidence did quite make it above the safety mark leading investors to run back into bonds like scared bunnies. Bond yields dropped across the board today sharply with total equities put call ratio moving above par in favor of put options trading once again. Indeed, investors and traders has turned from being technical sensitive like they did over the past 2 months to being very fundamental sensitive in anticipation of a new bull leg. With such a focus in the market, we can expect every major economic release for the rest of the week to have a big impact on the market. That will lead to a pretty volatile week ahead I am sure.
Technicals
No surprises today. I predicted this pullback in my email to paid subscribers yesterday as the market needs to vent some of its short term overbought condition and also test the integrity of this "reversal". In fact, I won't be surprised the Dow retests its 30DMA before the real bull run begins and that is IF it survives the retest. As such, this is still the time to be spotting good entries and not making them yet. That is also what my Star Trading System is doing now.
For now, the Dow remains in short term bull trend within an intermediate neutral trend and a primary bull trend.
Fundamentals
Just when investors and traders have mustered enough confidence in the trend of recovering economic data, almost all economic data today turned in disappointing, leading to a selloff. Both sales data today turned in worse this week with Consumer Confidence taking an unexpectedly huge hit. Even the increase in Investor Confidence did quite make it above the safety mark leading investors to run back into bonds like scared bunnies. Bond yields dropped across the board today sharply with total equities put call ratio moving above par in favor of put options trading once again. Indeed, investors and traders has turned from being technical sensitive like they did over the past 2 months to being very fundamental sensitive in anticipation of a new bull leg. With such a focus in the market, we can expect every major economic release for the rest of the week to have a big impact on the market. That will lead to a pretty volatile week ahead I am sure.
Technicals
No surprises today. I predicted this pullback in my email to paid subscribers yesterday as the market needs to vent some of its short term overbought condition and also test the integrity of this "reversal". In fact, I won't be surprised the Dow retests its 30DMA before the real bull run begins and that is IF it survives the retest. As such, this is still the time to be spotting good entries and not making them yet. That is also what my Star Trading System is doing now.
For now, the Dow remains in short term bull trend within an intermediate neutral trend and a primary bull trend.
Dow Confirms Breakout!
The Dow broke away from the 11,600 points resistance zone decisively last Friday after being kept below that level for two months. The move was backed up by good volume, good rising of bond yields across the board suggesting that investors did come behind the move and a good drop in total equities put call ratio suggesting that traders agree with the move and are now trading more call options than put options.
It was truly an amazing breakout last Friday but lets be prepared for a little pull back on short term profit taking on Monday and see how investors and traders follow up with GDP coming up on Thursday. All in all, it was a breakthrough week last week and time to start spotting some good longs.
It was truly an amazing breakout last Friday but lets be prepared for a little pull back on short term profit taking on Monday and see how investors and traders follow up with GDP coming up on Thursday. All in all, it was a breakthrough week last week and time to start spotting some good longs.
Struggle Continues at 11,600 Points Zone
The Dow continues to struggle around the 11,600 points resistance zone, closing down by 72 points as investors continue to be uncertain ahead of tomorrow's major leading indicators.
Fundamentals
More uncertainty surrounding the Euro zone issues as well as tomorrow's leading indicators caused traders to take short term profit off the table today after a nice early session. The Empire State Index's disappointment early this week also set a negative tone to the coming leading indicators which might yield the market to the side of the bears should they turn out worse than expected, especially at this critical technical junction. Analysts are expecting slightly better numbers for all leading indicators as well as jobless claims tomorrow which may lead to an easy disappointment. Economic data seems to have recovered from their volatility since last week but how the Empire State Index turned out still threw a spanner into the clockwork.
Technicals
The Dow continues to struggle at this very critical 11,600 resistance zone. It has failed to break out of this area over the past two months leading to two full months of volatile sideways trend but this time round, it is not going down without a fight. Indeed, this is the first time over the past two months that the Dow has spent so long struggling at this level. This can only mean two things; chances of it holding up and reversing into a new bull leg is very high but if it fails to do so, the coming bear leg might be a strong one. Short term bearish momentum continues to rise and short term bearish formations appeared on my Star Trading System abundantly. As such, I continue to stick to my view of a retest of the 30DMA which will tell us where this market is going.
For now, the Dow remains in a short term neutral trend within an intermediate bear trend and primary bull trend.
Fundamentals
More uncertainty surrounding the Euro zone issues as well as tomorrow's leading indicators caused traders to take short term profit off the table today after a nice early session. The Empire State Index's disappointment early this week also set a negative tone to the coming leading indicators which might yield the market to the side of the bears should they turn out worse than expected, especially at this critical technical junction. Analysts are expecting slightly better numbers for all leading indicators as well as jobless claims tomorrow which may lead to an easy disappointment. Economic data seems to have recovered from their volatility since last week but how the Empire State Index turned out still threw a spanner into the clockwork.
Technicals
The Dow continues to struggle at this very critical 11,600 resistance zone. It has failed to break out of this area over the past two months leading to two full months of volatile sideways trend but this time round, it is not going down without a fight. Indeed, this is the first time over the past two months that the Dow has spent so long struggling at this level. This can only mean two things; chances of it holding up and reversing into a new bull leg is very high but if it fails to do so, the coming bear leg might be a strong one. Short term bearish momentum continues to rise and short term bearish formations appeared on my Star Trading System abundantly. As such, I continue to stick to my view of a retest of the 30DMA which will tell us where this market is going.
For now, the Dow remains in a short term neutral trend within an intermediate bear trend and primary bull trend.
Dow Breaks Out?
What a week it was last week!
It almost looked like a breakout/reversal week last week with the Dow closing above the 11,600 points for the first time in 11 weeks on a weekly basis! However, I referred to it as "almost looked like" because the Dow is actually still trading within the influence of the 11,600 / 10,600 channel. There were also no strong fundamental developments to support such a reversal. As such, I would still expect to see a retest of the 30DMA soon. The quality of the retest would tell me if this is a reversal or that the Dow is simply still trading within that 1000 points channel.
For now, I would still be very careful in defining this as a breakout. This week is options expiration week and we are also getting some important leading indicators. If leading indicators continue the trend of better than expected economic data, that might be the short term fundamental catalyst needed to convince investors that this is a reversal we are looking at.
It almost looked like a breakout/reversal week last week with the Dow closing above the 11,600 points for the first time in 11 weeks on a weekly basis! However, I referred to it as "almost looked like" because the Dow is actually still trading within the influence of the 11,600 / 10,600 channel. There were also no strong fundamental developments to support such a reversal. As such, I would still expect to see a retest of the 30DMA soon. The quality of the retest would tell me if this is a reversal or that the Dow is simply still trading within that 1000 points channel.
For now, I would still be very careful in defining this as a breakout. This week is options expiration week and we are also getting some important leading indicators. If leading indicators continue the trend of better than expected economic data, that might be the short term fundamental catalyst needed to convince investors that this is a reversal we are looking at.
Bulls Running Nut Of Steam...
The Dow closed marginally lower by 40 points today as Jobless Claims disappoints.
Fundamentals
US market opened in the red today as Jobless Claims turned in slightly worse than expected and remained above the 400K mark adamantly. The 400K mark is beginning to become the hurdle over which investors would consider the employment situation to be improving. As long as it remains above the 400K mark, its hard to give any credit to improving unemployment rate on the sentiments level. Volume also teed off today as investors begin to slow down and see where the market is going. Options traders seem to be a little bit more optimistic today as they bring down total equities put call ratio to 1.05 from 1.30 as put options trading reduces in relation to call options trading. However, as long as total equities put call ratio remain anything above 0.9, I won't deem it to indicate a bullish sentiment reversal.
Technicals
The Dow formed a hangman candlestick today following yesterday's inverted hammer, which is yet again another strong bearish signal. A hangman candlestick signal is a candlestick that has a small upper body with a long wick on the bottom. Such a candlestick typically indicates presence of bearish forces when they occur at the top of an up trend. As we have seen last month, the Dow usually makes a few bearish candlesticks at around 11,600 points before turning downwards again and this time round, it seems to be doing the exact same thing with short term bearish momentum now rising. On top of that, as long as total equities put call ratio remains above 0.9 consistently, the market won't have the drive for a bullish breakout as the total equities put call ratio is a good indication of what traders in general are thinking about and would remain consistently below 0.9 in a bull trend and consistently higher than 0.9 in a bear trend. If the traders are not bullish, its hard for the market to muster the energy for a breakout unless something significant changes in the fundamentals.
For now, the Dow remains in short term neutral trend within an intermediate bear trend and primary bull trend.
Fundamentals
US market opened in the red today as Jobless Claims turned in slightly worse than expected and remained above the 400K mark adamantly. The 400K mark is beginning to become the hurdle over which investors would consider the employment situation to be improving. As long as it remains above the 400K mark, its hard to give any credit to improving unemployment rate on the sentiments level. Volume also teed off today as investors begin to slow down and see where the market is going. Options traders seem to be a little bit more optimistic today as they bring down total equities put call ratio to 1.05 from 1.30 as put options trading reduces in relation to call options trading. However, as long as total equities put call ratio remain anything above 0.9, I won't deem it to indicate a bullish sentiment reversal.
Technicals
The Dow formed a hangman candlestick today following yesterday's inverted hammer, which is yet again another strong bearish signal. A hangman candlestick signal is a candlestick that has a small upper body with a long wick on the bottom. Such a candlestick typically indicates presence of bearish forces when they occur at the top of an up trend. As we have seen last month, the Dow usually makes a few bearish candlesticks at around 11,600 points before turning downwards again and this time round, it seems to be doing the exact same thing with short term bearish momentum now rising. On top of that, as long as total equities put call ratio remains above 0.9 consistently, the market won't have the drive for a bullish breakout as the total equities put call ratio is a good indication of what traders in general are thinking about and would remain consistently below 0.9 in a bull trend and consistently higher than 0.9 in a bear trend. If the traders are not bullish, its hard for the market to muster the energy for a breakout unless something significant changes in the fundamentals.
For now, the Dow remains in short term neutral trend within an intermediate bear trend and primary bull trend.
Uncertainty Continues...
The Dow moved sideways today, closing marginally lower by 16 points on mixed sales data.
Fundamentals
US market opened marginally lower today and then bounced up and down around the breakeven line as investors continue to be undecided after an extremely strong holiday Monday rally. Sales data today didn't help maintain the optimism as they turned in largely mixed. Even though investors are still returning to equities from bonds, raising bond yields across the board, traders are less optimistic and pushed total equities put call ratio higher in favor of put options trading. Indeed, it is an extremely undecided market now. On the one hand, we have recovering economic data but on the other hand, investors know that the unresolved debt issue Europe side could hit the market anytime like a time bomb. In fact, investors/traders don't seem to be returning from the holiday yet as trading volume continue to drop today. Yes, volume has been dropping since day one of this "rally" so far and I would be careful in being too optimistic with it.
Technicals
Dropping volume, declining short term bullish momentum, rising put call ratio; None of these sound right for a "bullish breakout". We should see a retest of the 30DMA soon...
For now, the Dow remains in short term neutral trend within an intermediate bear trend and primary bull trend.
Fundamentals
US market opened marginally lower today and then bounced up and down around the breakeven line as investors continue to be undecided after an extremely strong holiday Monday rally. Sales data today didn't help maintain the optimism as they turned in largely mixed. Even though investors are still returning to equities from bonds, raising bond yields across the board, traders are less optimistic and pushed total equities put call ratio higher in favor of put options trading. Indeed, it is an extremely undecided market now. On the one hand, we have recovering economic data but on the other hand, investors know that the unresolved debt issue Europe side could hit the market anytime like a time bomb. In fact, investors/traders don't seem to be returning from the holiday yet as trading volume continue to drop today. Yes, volume has been dropping since day one of this "rally" so far and I would be careful in being too optimistic with it.
Technicals
Dropping volume, declining short term bullish momentum, rising put call ratio; None of these sound right for a "bullish breakout". We should see a retest of the 30DMA soon...
For now, the Dow remains in short term neutral trend within an intermediate bear trend and primary bull trend.
Jobs Report Failed To Bring Back Bulls...
The market continue to be technical drive as the better than expected Jobs report of last Friday once again failed to overcome the powerful 30DMA resistance level.
I was thinking last week that a better than expected Jobs report might be the catalyst for the Dow to stage a topside breakout of its current congestion since it has once again displayed strength at the 200WMA level. Surprisingly, it didn't. The better than expected ISM index didn't turn things around neither did the better than expected Jobs report, both of which are the most heavy weight economic data in the US market.
Indeed, even though investors did return to equities on the news, raising bond yields across the board, traders are not ready for the market to break out to topside yet. Indeed, a topside breakout could mean a reversal of the current intermediate bear trend and I think many traders are not ready for that yet. In fact, total equities put call ratio continue to show a generally bearish sentiment. On the other hand, traders are obviously not ready for a bottomside breakout since there would mean an unprecedented bearish move that might take the market back into a primary bear trend. As such, traders continue to bounce between the 30DMA and the 200WMA, which has now become an extremely narrow channel allowing only for a couple of days move in either direction. With the recovering economic data, I would say odds now favor a topside breakout but the timing of which could be a tricky issue for now. This is also why my Star Trading System have been keeping us out on the sidelines all week last week.
I was thinking last week that a better than expected Jobs report might be the catalyst for the Dow to stage a topside breakout of its current congestion since it has once again displayed strength at the 200WMA level. Surprisingly, it didn't. The better than expected ISM index didn't turn things around neither did the better than expected Jobs report, both of which are the most heavy weight economic data in the US market.
Indeed, even though investors did return to equities on the news, raising bond yields across the board, traders are not ready for the market to break out to topside yet. Indeed, a topside breakout could mean a reversal of the current intermediate bear trend and I think many traders are not ready for that yet. In fact, total equities put call ratio continue to show a generally bearish sentiment. On the other hand, traders are obviously not ready for a bottomside breakout since there would mean an unprecedented bearish move that might take the market back into a primary bear trend. As such, traders continue to bounce between the 30DMA and the 200WMA, which has now become an extremely narrow channel allowing only for a couple of days move in either direction. With the recovering economic data, I would say odds now favor a topside breakout but the timing of which could be a tricky issue for now. This is also why my Star Trading System have been keeping us out on the sidelines all week last week.
Technical Bulls and Bears Battle It Out!
The Dow gained 153 points today as fierce fight for territory at the 200WMA ensues.
Fundamentals
Despite somewhat better sales data and Factory Orders, traders continue to take the market lower in technical based trading. Indeed, market action these few days has ignored heavyweight positive surprises in the economic data and persisted in selling off on every bit of strength on technical based trading. On the fundamental front, US economic data seems to be on a recovery phase once again as the recent data, including the ISM Index has turned in better than expected. However, investors still have plenty of reasons to be cautious due to the unresolved European debt issue while traders have plenty of reasons to short into the recent strong bearish signals in the market. So lets take a look at what the technicals are saying about today's market action.
Technicals
Today is truly a battle between the technical bulls and the technical bears. Technical traders have been predominantly bearish over the past few days on the obvious resistance from the 30DMA. However, as the Dow hit its 200WMA intraday today, some technical bears has begun to turn technical bulls, expecting the 200WMA to hold up strongly like it has done so far. This led to the battle we saw today with the bears taking the market down right from the start and then accumulation around the 200WMA into the close with the bulls winning the day. Indeed, just as the 30DMA was a strong resistance, the 200WMA is an extremely strong support level as well. Like I mentioned before, the market might just trade range bound by the 30DMA and 200WMA for a while more until some significant development arises on the fundamental front.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
Fundamentals
Despite somewhat better sales data and Factory Orders, traders continue to take the market lower in technical based trading. Indeed, market action these few days has ignored heavyweight positive surprises in the economic data and persisted in selling off on every bit of strength on technical based trading. On the fundamental front, US economic data seems to be on a recovery phase once again as the recent data, including the ISM Index has turned in better than expected. However, investors still have plenty of reasons to be cautious due to the unresolved European debt issue while traders have plenty of reasons to short into the recent strong bearish signals in the market. So lets take a look at what the technicals are saying about today's market action.
Technicals
Today is truly a battle between the technical bulls and the technical bears. Technical traders have been predominantly bearish over the past few days on the obvious resistance from the 30DMA. However, as the Dow hit its 200WMA intraday today, some technical bears has begun to turn technical bulls, expecting the 200WMA to hold up strongly like it has done so far. This led to the battle we saw today with the bears taking the market down right from the start and then accumulation around the 200WMA into the close with the bulls winning the day. Indeed, just as the 30DMA was a strong resistance, the 200WMA is an extremely strong support level as well. Like I mentioned before, the market might just trade range bound by the 30DMA and 200WMA for a while more until some significant development arises on the fundamental front.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
Dow Failed Repeatedly at 30DMA
What a week it was last week! What looked like a strong and promising week ended with much disappointment despite some better than expected economic data. The Dow did another critical failure at the 30DMA last Friday, closing down by 240 points despite Chicago PMI turning in better than expected. Indeed, the market looks totally technical driven at the moment as traders turn bearish on the unmistakable multiple failure at the 30DMA. Every failure increases the chances of a downside 200WMA breakout, which could have disastrous results. At this point in time, investors and traders definitely are definitely putting more emphasis on safety than growth, being more risk averse. Last Friday's action could also be a result of cautious covering before this week's heavyweight economic data starting with the ISM Index on Monday and the Jobs Report on Friday (see Stock Market Calendar). Could last week's bout of better than expected economic data lead to better showing in both heavyweight numbers this week? No matter how they turn out, it is now a topside breakout of the 30DMA that can save the day. So far, it is looking more and more grim...
GDP and Jobless Claims Fight Back!
The Dow recovered some lost ground today, closing upwards by 143 points as both GDP and Jobless Claims turned in better than expected.
Fundamentals
US market received a much needed boost of confidence today as both Q2 Final GDP and Jobless Claims turned in much better than expected, leading to a high opening. Q2F Real GDP turned in a surprising 1.3% vs consensus of 1.2%. Even more surprising was the huge drop in jobless claims to 391K. Jobless Claims has not went under 400K since March 2011, making it an extremely significant development on the jobs front. In a consumer driven economy, all good news on the jobs front is good news for the stock market. However, the strength led once again to a steep sell off all the way into the final hour before the bulls fought back for some lost ground. In fact, bond yields continued to drop across the board today suggesting that investors are still using good news as exit points. Indeed, today's good economic data didn't seem to have changed the fundamental lack of confidence that the market is going through right now. It is going to take a lot more, especially developments in the European debt issue, to truly turn things around.
Technicals
Even though the Dow made significant gains today, it still stopped short at its 30DMA, forming a third consecutive lower high and lower low candle. No matter how the Dow closed, three consecutive days of lower high and lower low is extremely bearish and the fact that the 30DMA once again stopped its advance dead in its tracks tells me that the market is in a lot of trouble technically unless something change fundamentally, quickly.
For now, the Dow remains in a short term neutral trend within an intermediate bear trend and primary bull trend.
Fundamentals
US market received a much needed boost of confidence today as both Q2 Final GDP and Jobless Claims turned in much better than expected, leading to a high opening. Q2F Real GDP turned in a surprising 1.3% vs consensus of 1.2%. Even more surprising was the huge drop in jobless claims to 391K. Jobless Claims has not went under 400K since March 2011, making it an extremely significant development on the jobs front. In a consumer driven economy, all good news on the jobs front is good news for the stock market. However, the strength led once again to a steep sell off all the way into the final hour before the bulls fought back for some lost ground. In fact, bond yields continued to drop across the board today suggesting that investors are still using good news as exit points. Indeed, today's good economic data didn't seem to have changed the fundamental lack of confidence that the market is going through right now. It is going to take a lot more, especially developments in the European debt issue, to truly turn things around.
Technicals
Even though the Dow made significant gains today, it still stopped short at its 30DMA, forming a third consecutive lower high and lower low candle. No matter how the Dow closed, three consecutive days of lower high and lower low is extremely bearish and the fact that the 30DMA once again stopped its advance dead in its tracks tells me that the market is in a lot of trouble technically unless something change fundamentally, quickly.
For now, the Dow remains in a short term neutral trend within an intermediate bear trend and primary bull trend.
30DMA, 200WMA...
The Dow followed up on yesterday's rally, gaining 146 points against mixed economic data today.
Fundamentals
US index futures were already pointing sharply higher before US market open today as a wave of optimism swept across global markets before US market open. Investors continued to return to equities from the low bond yields, pushing up bond yields across the board significantly once again. However, these two day's optimism came on the back of no strong fundamental support and that has led options traders to start getting cautious and moved back to put options trading for some downside protection. Total equities put call ratio rose significantly in favor of put options trading which is unusual for a strong buying day. Indeed, one cannot ignore the steep selloff during the last couple of hours of today's session which may well make this two days "rally" nothing more than a dead cat bounce.http://www.blogger.com/img/blank.gif
Technicals
Even though it was a strong day in the market today, the Dow actually sold off intraday around the 30DMA level and closed below it. This shows that the 30DMA continues to be a strong resistance level. It is now the battle of the 30DMA and 200WMa... breaking out and staying out of these levels will pave the way for the market at least for the next 30 days. The Dow has failed to complete a reversal after two good attempts over the past month but it has also failed to break below a strong 200WMA support. Yes, the market is in some kind of stalemate now, the kind of condition you don't want to take sides in. Time for a Volatile Options Strategy?
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
Fundamentals
US index futures were already pointing sharply higher before US market open today as a wave of optimism swept across global markets before US market open. Investors continued to return to equities from the low bond yields, pushing up bond yields across the board significantly once again. However, these two day's optimism came on the back of no strong fundamental support and that has led options traders to start getting cautious and moved back to put options trading for some downside protection. Total equities put call ratio rose significantly in favor of put options trading which is unusual for a strong buying day. Indeed, one cannot ignore the steep selloff during the last couple of hours of today's session which may well make this two days "rally" nothing more than a dead cat bounce.http://www.blogger.com/img/blank.gif
Technicals
Even though it was a strong day in the market today, the Dow actually sold off intraday around the 30DMA level and closed below it. This shows that the 30DMA continues to be a strong resistance level. It is now the battle of the 30DMA and 200WMa... breaking out and staying out of these levels will pave the way for the market at least for the next 30 days. The Dow has failed to complete a reversal after two good attempts over the past month but it has also failed to break below a strong 200WMA support. Yes, the market is in some kind of stalemate now, the kind of condition you don't want to take sides in. Time for a Volatile Options Strategy?
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
Dow: One More Step And Off The Cliff...
The Dow revisited its 200WMA last week in a solid landslide week and is once again sitting right there on the 200WMA. As I have mentioned before, everytime the Dow breaks below the 200WMA, it goes into a significant down trend and being here once again after failing a reversal attempt along with so many fundamental issues in US and Europe makes it a very dangerous time to try to spot for longs. The Dow also formed a short term head and shoulders formation which also puts the odds in favor of a downside breakout. Unless this week pulls back up strongly, the market could go very much lower with immediate psychological support at the 10,000 points level. It is going to be a fairly quiet week ahead with no heavyweight economic releases, as such, the only way the Dow could pull back up strongly would be due to developments in the European debt issues. That is something nobody can predict for now.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
Made 38% Profit on MMR Yesterday!
My Star Trading System produced a qualified trade on the November $13 strike price put options of MMR on 9 Sep 2011. I issued that same pick in my Master's Stock Option picks service and bought those options for $2.32.
On 22 Sep 2011, I sold the position for $3.20 at a 38% profit! Below is my transaction record and chart:
Are you going to miss my next winning trade?
Sign up for my Star Trading System training course or my Master's Stock Options Pick Service and profit with me Now!
On 22 Sep 2011, I sold the position for $3.20 at a 38% profit! Below is my transaction record and chart:
Are you going to miss my next winning trade?
Sign up for my Star Trading System training course or my Master's Stock Options Pick Service and profit with me Now!
The Dow Back To Square One
The Dow collapsed by a huge 391 points today as Wednesday's failed retest of the 30DMA led to the strong avalanche that I spoke of all week long this week.
Fundamentals
The Fed's failure to please the crowd on Wednesday along with worse than expected Jobless Claims today led to a strong sell-off today. In fact, this strong sense of pessimism has already affected markets all over the world before US market opening due to how the US market reacted to the FOMC Announcement on Wednesday. Investors also looked past a better than expected leading indicators and rushed back strongly to bonds, depressing bond yields across the board to recently unseen lows. Options traders continue to favor put options trading strongly today as they continue speculation to downside. Overall, this is an extremely negative market which could lead to new lows if no groundbreaking development arise from the European debt issue.
Technicals
I mentioned on Tuesday that the Dow could have a chance at a bullish reversal "unless it goes back down below the line and take back all of last Thursday's gains". That's exactly what happened on Wednesday itself. The Dow retested and failed to hold up the 30DMA and took back all of last Thursday's breakout candle gains all at one shot. A failure of such a critical reversal point reflects a failure of confidence which will lead to a lot more lows. In fact, today's strong follow up to downside also led the Dow into a bearish breakout of the recent lowering pennant formation and brought us back to the revisit of the 200WMA scenario the market was in before last Thursday's breakout.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
Fundamentals
The Fed's failure to please the crowd on Wednesday along with worse than expected Jobless Claims today led to a strong sell-off today. In fact, this strong sense of pessimism has already affected markets all over the world before US market opening due to how the US market reacted to the FOMC Announcement on Wednesday. Investors also looked past a better than expected leading indicators and rushed back strongly to bonds, depressing bond yields across the board to recently unseen lows. Options traders continue to favor put options trading strongly today as they continue speculation to downside. Overall, this is an extremely negative market which could lead to new lows if no groundbreaking development arise from the European debt issue.
Technicals
I mentioned on Tuesday that the Dow could have a chance at a bullish reversal "unless it goes back down below the line and take back all of last Thursday's gains". That's exactly what happened on Wednesday itself. The Dow retested and failed to hold up the 30DMA and took back all of last Thursday's breakout candle gains all at one shot. A failure of such a critical reversal point reflects a failure of confidence which will lead to a lot more lows. In fact, today's strong follow up to downside also led the Dow into a bearish breakout of the recent lowering pennant formation and brought us back to the revisit of the 200WMA scenario the market was in before last Thursday's breakout.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
Fear Ahead of FOMC Announcement
The Dow moved sideways today, closing marginally higher by 7 points as huge intraday gains gave way during the last two hours to short term profit taking ahead of tomorrow's FOMC Announcement.
Fundamentals
Even though global markets were largely positive today, US investors and traders sold off initially on the worse than expected sales data released pre market. However, optimism in the global markets before US market opened caught up quite quickly and took the market to their session highs. However, US investors and traders took the opportunity to take some quickly short term profit and sold off in the afternoon ahead of tomorrow's FOMC announcement. There is a lot of uncertainty surrounding the FOMC announcement tomorrow with the GOP leaders urging against further rate cuts as if they already know a rate cut is in the making. Indeed, a rate cut right now would do very little more than increase the risk of inflation. The economy is suffering from fundamental issues that cannot be directly cured using rate cuts. The rest of the week is certainly going to be turbulent with the FOMC announcement tomorrow and Jobless claims as well as Leading indicators on Thursday, all of which can sway sentiments strongly.
Technicals
The Dow is clearly under significant short term pressure right now as it once again failed to make any head way. However, the Dow still managed to hold on to last Thursday's gain, which is a breakout candle. That, along with the fact that the Dow continue to trade above a now rising 30DMA, puts the odds in favor of a bullish reversal unless it goes back down below the line and take back all of last Thursday's gains. Short term bearish momentum is now rising indicating possible short term weakness coming up. The Dow could retest the 30DMA for strength before the reversal can happen. The Dow survived multiple strong bearish formations to get this far and it certainly won't give up without a fight.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
Fundamentals
Even though global markets were largely positive today, US investors and traders sold off initially on the worse than expected sales data released pre market. However, optimism in the global markets before US market opened caught up quite quickly and took the market to their session highs. However, US investors and traders took the opportunity to take some quickly short term profit and sold off in the afternoon ahead of tomorrow's FOMC announcement. There is a lot of uncertainty surrounding the FOMC announcement tomorrow with the GOP leaders urging against further rate cuts as if they already know a rate cut is in the making. Indeed, a rate cut right now would do very little more than increase the risk of inflation. The economy is suffering from fundamental issues that cannot be directly cured using rate cuts. The rest of the week is certainly going to be turbulent with the FOMC announcement tomorrow and Jobless claims as well as Leading indicators on Thursday, all of which can sway sentiments strongly.
Technicals
The Dow is clearly under significant short term pressure right now as it once again failed to make any head way. However, the Dow still managed to hold on to last Thursday's gain, which is a breakout candle. That, along with the fact that the Dow continue to trade above a now rising 30DMA, puts the odds in favor of a bullish reversal unless it goes back down below the line and take back all of last Thursday's gains. Short term bearish momentum is now rising indicating possible short term weakness coming up. The Dow could retest the 30DMA for strength before the reversal can happen. The Dow survived multiple strong bearish formations to get this far and it certainly won't give up without a fight.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
Dow Reversing?
The Dow made an impressive gain last week, posting the first weekly gain after two consecutive down weeks. Last week's "rally" didn't come on the back of any major fundamental improvements but made significant signs of a reversal out of this intermediate bear trend on the technical front. With last week's rally, the Dow has now completed a nice intermediate term double bottom on the weekly chart supported by rising bullish momentum. This is also supported by the bullish breakout of the short term wedge formation on the daily charts and the only thing that seems to stand between the Dow and a full reversal is the daily 200DMA resistance level.
This is a critical resistance level which the Dow can still fail at. A failure at the 200DMA is a serious one which will lead to much more downside to come. As such, this is not the time now to be newly bullish yet but to monitor market sentiments for a better entry point.
This is also FOMC week where the Fed will announce rate decision on Wednesday. Investors and analysts are not expecting the Fed to do anything but keep rates steady for now in the face of the economic uncertainty so there should be no surprises on that front. As such, the big economic releases this week seems to be the Jobless Claims and Leading Indicators on Thursday.
This is a critical resistance level which the Dow can still fail at. A failure at the 200DMA is a serious one which will lead to much more downside to come. As such, this is not the time now to be newly bullish yet but to monitor market sentiments for a better entry point.
This is also FOMC week where the Fed will announce rate decision on Wednesday. Investors and analysts are not expecting the Fed to do anything but keep rates steady for now in the face of the economic uncertainty so there should be no surprises on that front. As such, the big economic releases this week seems to be the Jobless Claims and Leading Indicators on Thursday.
Dow Above 30DMA At Last...
The Dow broke out of its short term wedge formation today, closing above its 30DMA significantly for the first time since this correction begun, ending the day upwards by 186 points.
Fundamentals
The market today is unexpectedly strong, driven by optimism in the global market before US market opened. In fact, almost all the economic data today turned in worse than expected so there is no real fundamentals behind today's strong move. As such, it is suspected that the buying may be due to the exercise of some derivatives instruments ahead of tomorrow's Quadruple Witching day where a bunch of derivative instruments are set to expire all at once. Quadruple witching days are generally days of huge volatility, huge trading volume as derivatives are exercised for their underlying stocks but are also generally days of very limited net gain or loss. Quadruple witching days therefore usually end in a small bodied candlestick with long wicks and huge volume like we have seen so many times in the past.
Technicals
Clearly, today's move is technical but a very significant one. The Dow has not closed significantly higher than its 30DMA since this intermediate bear trend started and this move truly breaks its downwards momentum. Today's move marks the first step for the Dow if it wants to break the current lowering penant formation to the upside. It is clear now that the top of the lowering pennant has moved on to the 50DMA and only by clearing that level and then subsequently the 200DMA which is just above the 50DMA now, can the Dow assure itself of a reversal.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
Fundamentals
The market today is unexpectedly strong, driven by optimism in the global market before US market opened. In fact, almost all the economic data today turned in worse than expected so there is no real fundamentals behind today's strong move. As such, it is suspected that the buying may be due to the exercise of some derivatives instruments ahead of tomorrow's Quadruple Witching day where a bunch of derivative instruments are set to expire all at once. Quadruple witching days are generally days of huge volatility, huge trading volume as derivatives are exercised for their underlying stocks but are also generally days of very limited net gain or loss. Quadruple witching days therefore usually end in a small bodied candlestick with long wicks and huge volume like we have seen so many times in the past.
Technicals
Clearly, today's move is technical but a very significant one. The Dow has not closed significantly higher than its 30DMA since this intermediate bear trend started and this move truly breaks its downwards momentum. Today's move marks the first step for the Dow if it wants to break the current lowering penant formation to the upside. It is clear now that the top of the lowering pennant has moved on to the 50DMA and only by clearing that level and then subsequently the 200DMA which is just above the 50DMA now, can the Dow assure itself of a reversal.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
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Dow Caught In A "Wedge"
The Dow gained by 44 points today on the back of better than expected Store Sales and continued bargain hunting brought over from yesterday.
Fundamentals
Even though Store Sale turned in better than expected, Redbook's store sales actually turned in lower than last week. As such, sales data today was actually more mixed than positive. However, investors continued to return to equities on the back of bargain hunting left over from yesterday's optimism. Investors could also be pricing in better than expected performance for the coming leading indicators on Thursday. Analysts are expecting both the Empire State Index and Philley Fed to turn in better than last month this time round and certainly such a turn around in economic data is what investors have been waiting for. However, we have seen what such optimism before major economic releases has done lately; leading to nothing more than a strong profit taking.
Technicals
Clearly the Dow is in some kind of a wedge right now. On the one hand, it is being compressed by a lowering 30DMA into a lowering pennant formation. On the other hand, there is significant accumulative strength around the 11,000 level which we have seen since last month. This has caused the formation of a small lowering triangle formation or a "wedge" formation at the end of the lowering pennant formation. Such formations indicate extreme uncertainty and increases the chance of a significant leg up or down depending on the direction of breakout. Yes, this means that this could be the junction where the market decides where it wants to go for the next month or more. Going by the setups so far and the prevailing intermediate trend, odds would no doubt favor a downside breakout but that's not something you want to put everything you have on right now.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
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Fundamentals
Even though Store Sale turned in better than expected, Redbook's store sales actually turned in lower than last week. As such, sales data today was actually more mixed than positive. However, investors continued to return to equities on the back of bargain hunting left over from yesterday's optimism. Investors could also be pricing in better than expected performance for the coming leading indicators on Thursday. Analysts are expecting both the Empire State Index and Philley Fed to turn in better than last month this time round and certainly such a turn around in economic data is what investors have been waiting for. However, we have seen what such optimism before major economic releases has done lately; leading to nothing more than a strong profit taking.
Technicals
Clearly the Dow is in some kind of a wedge right now. On the one hand, it is being compressed by a lowering 30DMA into a lowering pennant formation. On the other hand, there is significant accumulative strength around the 11,000 level which we have seen since last month. This has caused the formation of a small lowering triangle formation or a "wedge" formation at the end of the lowering pennant formation. Such formations indicate extreme uncertainty and increases the chance of a significant leg up or down depending on the direction of breakout. Yes, this means that this could be the junction where the market decides where it wants to go for the next month or more. Going by the setups so far and the prevailing intermediate trend, odds would no doubt favor a downside breakout but that's not something you want to put everything you have on right now.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
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Dow Headed For Bearish Breakout
The world commemorated the 9/11 tragedy today, reminding ourselves how precious peace is.
The Dow turned down by a total of 501 points last week as the Dow headed back down to its 200WMA as I have predicted last week. On the daily scale, the Dow did a textbook style turn around at its 30DMA, heading downwards for a possible bearish breakout of its lowering pennant formation. If the Dow breaks out of this dangerous pattern to downside, we could see a revisit of the 10,000 points level, which is of course back down to 2009 levels which will bring the stock market inline with economic data so far. On the weekly scale, if the Dow breaks out below 10,750 points, it would breach its 200WMA which is always a very dangerous thing to do. Over the past 10 years, everytime the Dow breaks below the 200WMA, we could see significant new lows in the near future.
Good thing for my stock options picks subscribers and Star Trading System students that our system has placed us nicely on the correct side of the market with a couple of good bearish picks so far.
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The Dow turned down by a total of 501 points last week as the Dow headed back down to its 200WMA as I have predicted last week. On the daily scale, the Dow did a textbook style turn around at its 30DMA, heading downwards for a possible bearish breakout of its lowering pennant formation. If the Dow breaks out of this dangerous pattern to downside, we could see a revisit of the 10,000 points level, which is of course back down to 2009 levels which will bring the stock market inline with economic data so far. On the weekly scale, if the Dow breaks out below 10,750 points, it would breach its 200WMA which is always a very dangerous thing to do. Over the past 10 years, everytime the Dow breaks below the 200WMA, we could see significant new lows in the near future.
Good thing for my stock options picks subscribers and Star Trading System students that our system has placed us nicely on the correct side of the market with a couple of good bearish picks so far.
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Dow Forms Lowering Pennant Formation...
The Dow staged a surprise rally today, the kind that we have been seeing over the past month of volatile sideways trend, closing higher by 275 points.
Fundamentals
US market got off on a great start today as a wave of optimism swept over global markets prior to US market opening. In fact, index futures were already pointing sharply higher way before the better than expected sales data from the Redbook report. Investors rushed back for equities once again today in their see-saw game as they did all month long so far. Bond yields rose sharply across the board as investors sold off on the high bond prices and returned to stocks. Traders seem to be convinced that today's rally might be fundamentally different as options traders brought the total equities put call ratio down below par in favor of call options trading for the first time since this correction begun.
Technicals
The Dow revisited its 30DMA once again, continuing its recent behavior of sudden big moves. Today's move however, completed a "Lowering Pennant" or "Bear Pennant" formation, which is an intermediate bearish continuation formation. It is a formation which is formed through an extended period of sideways range bound trading following a significant down trend and is usually limited at the top by the 30DMA or 50DMA. Such a formation usually mean that the market could go either way significantly from here. If the Dow turns down again from here and breaks out to the bottom of the pennant, we could see a very significant new leg down. However, if the Dow breaks out to topside, we could have ourselves a reversal. However, being a bearish continuation formation, odds favor a downside continuation.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
Fundamentals
US market got off on a great start today as a wave of optimism swept over global markets prior to US market opening. In fact, index futures were already pointing sharply higher way before the better than expected sales data from the Redbook report. Investors rushed back for equities once again today in their see-saw game as they did all month long so far. Bond yields rose sharply across the board as investors sold off on the high bond prices and returned to stocks. Traders seem to be convinced that today's rally might be fundamentally different as options traders brought the total equities put call ratio down below par in favor of call options trading for the first time since this correction begun.
Technicals
The Dow revisited its 30DMA once again, continuing its recent behavior of sudden big moves. Today's move however, completed a "Lowering Pennant" or "Bear Pennant" formation, which is an intermediate bearish continuation formation. It is a formation which is formed through an extended period of sideways range bound trading following a significant down trend and is usually limited at the top by the 30DMA or 50DMA. Such a formation usually mean that the market could go either way significantly from here. If the Dow turns down again from here and breaks out to the bottom of the pennant, we could see a very significant new leg down. However, if the Dow breaks out to topside, we could have ourselves a reversal. However, being a bearish continuation formation, odds favor a downside continuation.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
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Dow Continues Decline...
The Dow declined by 100 points today as better than expected ISM Services helped lift the market off its deep opening loss.
Fundamentals
US market opened deep in the red as a wave of pessimism surrounding its poorer than expected jobs report hit world markets through the long weekend. However, a much better than expected ISM Services index encouraged some traders to return to the stock market, lifting the market all the way off its intraday low. The ISM Services or ISM Non-Manufacturing Index, is a cousin of the heavyweight ISM Manufacturing Index and does not usually has the influence to affect the stock market significantly. However, in a market thirsty for any bits of good economic data, the ISM Services today is enough to encourage traders to jump right in for it. However, none of the three major indexes managed to par losses and still ended the day red. While traders showed some encouraging buying today, bond yields continue to drop across the board as investors continue to head for the safety of bonds. Indeed, such as the kind of "rallies" that actually encourage profit taking/loss cutting.
Technicals
The Dow continued to retreat as expected today. Even though there were some intraday strength, short term bearish momentum continue to rise and market sentiments continue to be generally bearish. The Dow also created an inverted hammer candlestick signal today, which is a candle stick with a small body and a long wick on the bottom. Such a signal is a possible reversal signal if it occurs after a significant downtrend. However, inverted hammers this soon in a retreat creates a continuation signal for the market to go lower still. So far, there is nothing in the charts that suggest a reversal and a visit to the 10,750 level continues to be in the book.
For now, the Dow remains in a short term neutral trend within an intermediate bear trend and primary bull trend.
Fundamentals
US market opened deep in the red as a wave of pessimism surrounding its poorer than expected jobs report hit world markets through the long weekend. However, a much better than expected ISM Services index encouraged some traders to return to the stock market, lifting the market all the way off its intraday low. The ISM Services or ISM Non-Manufacturing Index, is a cousin of the heavyweight ISM Manufacturing Index and does not usually has the influence to affect the stock market significantly. However, in a market thirsty for any bits of good economic data, the ISM Services today is enough to encourage traders to jump right in for it. However, none of the three major indexes managed to par losses and still ended the day red. While traders showed some encouraging buying today, bond yields continue to drop across the board as investors continue to head for the safety of bonds. Indeed, such as the kind of "rallies" that actually encourage profit taking/loss cutting.
Technicals
The Dow continued to retreat as expected today. Even though there were some intraday strength, short term bearish momentum continue to rise and market sentiments continue to be generally bearish. The Dow also created an inverted hammer candlestick signal today, which is a candle stick with a small body and a long wick on the bottom. Such a signal is a possible reversal signal if it occurs after a significant downtrend. However, inverted hammers this soon in a retreat creates a continuation signal for the market to go lower still. So far, there is nothing in the charts that suggest a reversal and a visit to the 10,750 level continues to be in the book.
For now, the Dow remains in a short term neutral trend within an intermediate bear trend and primary bull trend.
Welcome Back From Labor Day!
Welcome back from the long weekend!
The market couldn't be more predictable last week with the Dow turning around at its 30DMA in a textbook manner, coinciding with the worse than expected jobs report on Friday. The Dow retreated a net total of 44 points last week, ending the dead cat bounce midweek and turning around on Thursday and Friday. Indeed, as I mentioned last week, the market is going to turn around lower no matter how the heavyweight numbers turn out and we indeed saw the market turn sharply lower on Thursday despite a better than expected ISM index. Investors also rushed back to the safety of bonds, depressing bond yields to recent lows. Index futures were already pointing sharply lower through the weekend and it does seem like this is going to be yet another negative week.
On the technical front, the Dow looks set to revisit its 200WMA at about 10,800 and could actually remain range bound between its 50WMA and 200WMA for an extended period of time like it did in 2004. This is the most optimistic scenario at this stage of economy "recovery". If the Dow should break below the 200WMA, we could see the primary bull trend jeopardized. However, I deem that to be a low probability scenario as all economic recoveries go through such a phase of toxic waste cleaning before the real bull trend starts.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
The market couldn't be more predictable last week with the Dow turning around at its 30DMA in a textbook manner, coinciding with the worse than expected jobs report on Friday. The Dow retreated a net total of 44 points last week, ending the dead cat bounce midweek and turning around on Thursday and Friday. Indeed, as I mentioned last week, the market is going to turn around lower no matter how the heavyweight numbers turn out and we indeed saw the market turn sharply lower on Thursday despite a better than expected ISM index. Investors also rushed back to the safety of bonds, depressing bond yields to recent lows. Index futures were already pointing sharply lower through the weekend and it does seem like this is going to be yet another negative week.
On the technical front, the Dow looks set to revisit its 200WMA at about 10,800 and could actually remain range bound between its 50WMA and 200WMA for an extended period of time like it did in 2004. This is the most optimistic scenario at this stage of economy "recovery". If the Dow should break below the 200WMA, we could see the primary bull trend jeopardized. However, I deem that to be a low probability scenario as all economic recoveries go through such a phase of toxic waste cleaning before the real bull trend starts.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
Dow Fails At 30DMA As Expected...
The Dow turned around at its 30DMA as I have expected, closing lower by 119 points despite a better than expected ISM Index.
Fundamentals
The first of this week's super heavyweight data, the ISM Index, turned in slightly better than expected but all it led to is a profit taking sell off that took the market off its high into the red as I have expected yesterday. Investors have indeed been pricing in better than expected ISM Index and Jobs Report over the past two weeks, resulting in a rally that has almost no fundamental support. Such a rally usually ends in a sell off no matter how those data turn out and this time round is no different. On top of that, the ISM Index really isn't impressive. Even though it was better than expected, it was still lower than last month, reinforcing the retreating growth scenario. In fact, I would see this sell off continue into tomorrow no matter how the jobs report turn out.
Technicals
The Dow retreated from overwhelming resistance built up over the past few days as expected. Two strong bearish candlestick signals occurring at the 30DMA in an intermediate bear trend at the top of a short term rally with no fundamental support. This one is textbook. Odds now favor a revisit of the 200WMA at about 10,750 once again.
The Dow remains in a short term neutral trend within an intermediate bear trend and primary bull trend.
Fundamentals
The first of this week's super heavyweight data, the ISM Index, turned in slightly better than expected but all it led to is a profit taking sell off that took the market off its high into the red as I have expected yesterday. Investors have indeed been pricing in better than expected ISM Index and Jobs Report over the past two weeks, resulting in a rally that has almost no fundamental support. Such a rally usually ends in a sell off no matter how those data turn out and this time round is no different. On top of that, the ISM Index really isn't impressive. Even though it was better than expected, it was still lower than last month, reinforcing the retreating growth scenario. In fact, I would see this sell off continue into tomorrow no matter how the jobs report turn out.
Technicals
The Dow retreated from overwhelming resistance built up over the past few days as expected. Two strong bearish candlestick signals occurring at the 30DMA in an intermediate bear trend at the top of a short term rally with no fundamental support. This one is textbook. Odds now favor a revisit of the 200WMA at about 10,750 once again.
The Dow remains in a short term neutral trend within an intermediate bear trend and primary bull trend.
End of Another Dead Cat Bounce...
The Dow continued to move largely sideways today, closing within yesterday's trading range up by 53 points.
Fundamentals
There was a lot of optimism in the morning session as much better than expected Chicago PMI and Factory Orders led to a wave of early buying. In fact, the market was already pointing sharply higher on the much better than expected Job-cut report announced pre-market. However, is there no reason to be selling off today? Of course there is. ADP employment report turned in worse than expected before market opened. Even though it was largely overlooked in the first half hour, selling into the strength begun shortly after that, taking the market all the way down from its intraday high into the red. A round of late buying took the market back up from the red, making it a slightly positive day today. It seems like today's market action is all about investors buying into the early data and traders selling into the strength and hedging their positions at this critical junction. Bond yields rose across the board as investors reallocate back into equities but total equities put call ratio actually rose in favor of put options trading as traders start to hedge their positions and speculate to downside. Yes, the next two days are critical as the truly market moving heavyweight data will be released in the form of the ISM Index and Jobs Report. Analysts are expecting both data to turn in worse than last month and of course, any negative surprise would mostly like start a new leg down.
Technicals
Traders continue to sell into the strength today as the Dow come up against its 30DMA resistance level, forming a topside inverted hammer signal. A topside inverted hammer is a candlestick that has a long wick on top of a small body near the bottom. Such a signal is an extremely bearish signal especially occurring at strong resistance levels and following other strong bearish signals such as yesterday's spinning top. Short term momentum indicators are also showing signs of the bullish momentum fading. Therefore it is most likely that the market is going to back down to revisit its 200WMA no matter how the economic data turn out over the next two days as it seems like much of the optimism has already been priced into the market through the short term rally (which has no real fundamental support) so far. As such, I would see this junction being a good point to start looking for new short opportunities.
For now, the Dow remains in short term neutral trend within an intermediate bear trend within a primary bull trend.
Fundamentals
There was a lot of optimism in the morning session as much better than expected Chicago PMI and Factory Orders led to a wave of early buying. In fact, the market was already pointing sharply higher on the much better than expected Job-cut report announced pre-market. However, is there no reason to be selling off today? Of course there is. ADP employment report turned in worse than expected before market opened. Even though it was largely overlooked in the first half hour, selling into the strength begun shortly after that, taking the market all the way down from its intraday high into the red. A round of late buying took the market back up from the red, making it a slightly positive day today. It seems like today's market action is all about investors buying into the early data and traders selling into the strength and hedging their positions at this critical junction. Bond yields rose across the board as investors reallocate back into equities but total equities put call ratio actually rose in favor of put options trading as traders start to hedge their positions and speculate to downside. Yes, the next two days are critical as the truly market moving heavyweight data will be released in the form of the ISM Index and Jobs Report. Analysts are expecting both data to turn in worse than last month and of course, any negative surprise would mostly like start a new leg down.
Technicals
Traders continue to sell into the strength today as the Dow come up against its 30DMA resistance level, forming a topside inverted hammer signal. A topside inverted hammer is a candlestick that has a long wick on top of a small body near the bottom. Such a signal is an extremely bearish signal especially occurring at strong resistance levels and following other strong bearish signals such as yesterday's spinning top. Short term momentum indicators are also showing signs of the bullish momentum fading. Therefore it is most likely that the market is going to back down to revisit its 200WMA no matter how the economic data turn out over the next two days as it seems like much of the optimism has already been priced into the market through the short term rally (which has no real fundamental support) so far. As such, I would see this junction being a good point to start looking for new short opportunities.
For now, the Dow remains in short term neutral trend within an intermediate bear trend within a primary bull trend.
Another Dead Cat Bounce Ending...
The Dow slowed its pace of advance today, closing marginally higher by 20 points as it comes up against the 30DMA resistance level.
Fundamentals
Economic data turned in pretty mixed today; Better than expected sales data in the morning was quickly hammered down by much worse than expected consumer and investor confidence data released after market opened. However, some investors still stepped into the better than expected sales data for the rest of the day and took the market back up into the green. However, it is clear that investors are beginning to get cautious around this level again as bond yields fell across the board suggesting that investors are moving back into bonds once again. Indeed, today's buying may be the result of the herd following through on yesterday's move, giving investors the chance to exit the game. This kind of market behavior usually occur on the back of yet another significant sell off. Indeed, with worse than expected heavyweight economic data coming up later this week, it is understandable for investors to start getting more cautious.
Technicals
The Dow hit its 30DMA intraday today and retreated from it, forming a top side spinning top candlestick signal. Such a signal occurring at strong resistance levels such as the 30DMA usually mean the end of a short term "rally". This ties in exactly with my expectation of the Dow testing the 30DMA and then retreating back down to the 200WMA as there simply isn't any fundamentals acting as fuel for a breakout. If the Dow turn around and make a negative day tomorrow, it would complete an evening star formation, which is an even stronger bearish formation. That is the most likely scenario. However, if the Dow finds strength in tomorrow's Chicago PMI and breaks out (the more unlikely scenario), a testing of the 200DMA would be next.
The Dow remains in a short term neutral trend within an intermediate bear trend and primary bull trend.
Fundamentals
Economic data turned in pretty mixed today; Better than expected sales data in the morning was quickly hammered down by much worse than expected consumer and investor confidence data released after market opened. However, some investors still stepped into the better than expected sales data for the rest of the day and took the market back up into the green. However, it is clear that investors are beginning to get cautious around this level again as bond yields fell across the board suggesting that investors are moving back into bonds once again. Indeed, today's buying may be the result of the herd following through on yesterday's move, giving investors the chance to exit the game. This kind of market behavior usually occur on the back of yet another significant sell off. Indeed, with worse than expected heavyweight economic data coming up later this week, it is understandable for investors to start getting more cautious.
Technicals
The Dow hit its 30DMA intraday today and retreated from it, forming a top side spinning top candlestick signal. Such a signal occurring at strong resistance levels such as the 30DMA usually mean the end of a short term "rally". This ties in exactly with my expectation of the Dow testing the 30DMA and then retreating back down to the 200WMA as there simply isn't any fundamentals acting as fuel for a breakout. If the Dow turn around and make a negative day tomorrow, it would complete an evening star formation, which is an even stronger bearish formation. That is the most likely scenario. However, if the Dow finds strength in tomorrow's Chicago PMI and breaks out (the more unlikely scenario), a testing of the 200DMA would be next.
The Dow remains in a short term neutral trend within an intermediate bear trend and primary bull trend.
Dow Rises As Expected...
The Dow rallied today by a huge 254 points as I have expected yesterday on dangerously low volume.
Fundamentals
A wave of optimism swept through global markets Monday as the hurricane situation in the US subsides. US index futures were pointing higher prior to opening also on the better than expected Personal Income and Expenditure. Indeed, anything pointing towards happy consumers always give some boost to the stock market in a consumer driven economy. The general sense of optimism also allowed the few investors involved in the market today to overlook the worsening pending home sales, which is another important aspect of the economy. Indeed, today's rally came on the back of extremely low volume which puts doubt on its validity. However, from the significant increase in bond yields across the board, it seems like institutional investors are coming back into equities from bonds. This means that the herd isn't buying into this and anything the herd doesn't follow into, doesn't quite have legs.
Technicals
The Dow continues its way up to its 30DMA as I have expected. The lack of volume going into the move also tells me that this "rally" isn't one that has legs and increases the chance that the Dow is simply going to fail at the 30DMA and come back down to retest the 200WMA that I talked about yesterday. So far, the Dow has been textbook and the volatile sideways trend seems to want to expand into a wider volatile sideways trend. One which I speculate could be bounded by the 200WMA and 30WMA just like in 2004.
For now the Dow remains in a short term neutral trend within an intermediate bear trend within a primary bull trend.
Fundamentals
A wave of optimism swept through global markets Monday as the hurricane situation in the US subsides. US index futures were pointing higher prior to opening also on the better than expected Personal Income and Expenditure. Indeed, anything pointing towards happy consumers always give some boost to the stock market in a consumer driven economy. The general sense of optimism also allowed the few investors involved in the market today to overlook the worsening pending home sales, which is another important aspect of the economy. Indeed, today's rally came on the back of extremely low volume which puts doubt on its validity. However, from the significant increase in bond yields across the board, it seems like institutional investors are coming back into equities from bonds. This means that the herd isn't buying into this and anything the herd doesn't follow into, doesn't quite have legs.
Technicals
The Dow continues its way up to its 30DMA as I have expected. The lack of volume going into the move also tells me that this "rally" isn't one that has legs and increases the chance that the Dow is simply going to fail at the 30DMA and come back down to retest the 200WMA that I talked about yesterday. So far, the Dow has been textbook and the volatile sideways trend seems to want to expand into a wider volatile sideways trend. One which I speculate could be bounded by the 200WMA and 30WMA just like in 2004.
For now the Dow remains in a short term neutral trend within an intermediate bear trend within a primary bull trend.
More Uncertainty Ahead...
First of all, let us thank the Lord for weakening Hurricane Irene as it reached the east coast, preventing the kind of massive damage that was previously anticipated. The Dow made a positive week last week at last after four consecutive down weeks, gaining 466 points on a week on week basis.
In a week where economic data continued to weaken and the threat of a Hurricane Irene right at the doorstep, the Dow staged an impressive rebound out of seemingly no strong reasons. Yes, these are what is known as "Technical Rebounds", which means rebounding on technical reasons rather than fundamental ones. Technical reasons means buying or selling due to the current market support or resistance rather than any real fundamental reasons. Indeed, it is hard to put any fundamental reasons behind last Friday's rally as it came on the back of a worse than expected GDP at 1.0% versus consensus of 1.1% and last quarter's 1.3%.
Clearly last week's rebound was a technical one and an expected one as I mentioned last Sunday. The Dow bounced off its 200WMA as expected of a strong support level. We could continue to see the Dow move higher to retest its 30DMA or even the 200DMA. However, it is unlikely that this is a reversal point. In fact, the market is more and more looking set to repeat the kind of post recovery uncertainty of 2004, bouncing between the 200WMA and 30WMA for an extended period of perhaps a year or more before enough toxic waste is drained from the economy to start a real rally. However, if the Dow breaks below the 200WMA this week, then the market would be in a lot of trouble even though that scenario looks to be of a slightly lower possibility from the way the charts are set up right now. It is still time to be very cautious.
This is the first week of September 2011 which means that we are going to get the heavyweight economic datas once again; ISM Index and Jobs Report. Analysts are expecting the ISM index to retreat below 50, indicating a contracting manufacturing sector, the first time since July 2009 and the first time in this recovery so far. Analysts are also expecting a shrinking in non-farm payroll in the Jobs Report. Indeed, if both reports fails to meet expectations, or even if they do, we could see the Dow revisit the 200WMA as the economy continues to shrink.
In a week where economic data continued to weaken and the threat of a Hurricane Irene right at the doorstep, the Dow staged an impressive rebound out of seemingly no strong reasons. Yes, these are what is known as "Technical Rebounds", which means rebounding on technical reasons rather than fundamental ones. Technical reasons means buying or selling due to the current market support or resistance rather than any real fundamental reasons. Indeed, it is hard to put any fundamental reasons behind last Friday's rally as it came on the back of a worse than expected GDP at 1.0% versus consensus of 1.1% and last quarter's 1.3%.
Clearly last week's rebound was a technical one and an expected one as I mentioned last Sunday. The Dow bounced off its 200WMA as expected of a strong support level. We could continue to see the Dow move higher to retest its 30DMA or even the 200DMA. However, it is unlikely that this is a reversal point. In fact, the market is more and more looking set to repeat the kind of post recovery uncertainty of 2004, bouncing between the 200WMA and 30WMA for an extended period of perhaps a year or more before enough toxic waste is drained from the economy to start a real rally. However, if the Dow breaks below the 200WMA this week, then the market would be in a lot of trouble even though that scenario looks to be of a slightly lower possibility from the way the charts are set up right now. It is still time to be very cautious.
This is the first week of September 2011 which means that we are going to get the heavyweight economic datas once again; ISM Index and Jobs Report. Analysts are expecting the ISM index to retreat below 50, indicating a contracting manufacturing sector, the first time since July 2009 and the first time in this recovery so far. Analysts are also expecting a shrinking in non-farm payroll in the Jobs Report. Indeed, if both reports fails to meet expectations, or even if they do, we could see the Dow revisit the 200WMA as the economy continues to shrink.
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Dow Retreats on Jobless Claims Disappointment
The Dow retreated 170 points today as jobless claims disappoints, putting pressure on an already scared market.
Fundamentals
US market took a hit today as jobless claims turned in worse than expected before market opened. Analysts were expecting jobless claims to turn in lower this week at 405K versus last week's 412K revised number but it turned in at 417K instead, which is not only higher than expected but was also higher than last week. Jobless claims seems to be bouncing around the 450K and 400K level whole year long this year so far, taking the decline in Jobless claims since 2009 to a screeching stop. In fact, over the course of the year, jobless claims seemed to have been on a slight up trend, which is of course a bad sign for an economy struggling to recover from an economic crisis. Analysts are also expecting a lower Real GDP for second quarter preliminary tomorrow, which also added to the cautiousness in the market, leading investors and traders to take some short term profit off the table.
Technicals
Despite making a strong negative day today, the Dow continued to make an expanding day of a higher high and higher low along with rising short term bullish momentum and strong volume. This suggests that the Dow may still continue its way to its 30MA as I have mentioned before where it will test for strength and perhaps make a new leg down on this intermediate bear trend.
For now, the Dow remains in a short term neutral trend within an intermediate bear trend and primary bull trend.
Fundamentals
US market took a hit today as jobless claims turned in worse than expected before market opened. Analysts were expecting jobless claims to turn in lower this week at 405K versus last week's 412K revised number but it turned in at 417K instead, which is not only higher than expected but was also higher than last week. Jobless claims seems to be bouncing around the 450K and 400K level whole year long this year so far, taking the decline in Jobless claims since 2009 to a screeching stop. In fact, over the course of the year, jobless claims seemed to have been on a slight up trend, which is of course a bad sign for an economy struggling to recover from an economic crisis. Analysts are also expecting a lower Real GDP for second quarter preliminary tomorrow, which also added to the cautiousness in the market, leading investors and traders to take some short term profit off the table.
Technicals
Despite making a strong negative day today, the Dow continued to make an expanding day of a higher high and higher low along with rising short term bullish momentum and strong volume. This suggests that the Dow may still continue its way to its 30MA as I have mentioned before where it will test for strength and perhaps make a new leg down on this intermediate bear trend.
For now, the Dow remains in a short term neutral trend within an intermediate bear trend and primary bull trend.
New Dead Cat Bounce Starts...
The Dow staged a technical rebound today by 322 points as expected despite worsening sales data.
Fundamentals
US market opened up to an optimistic start today as global markets continue to climb higher prior to US market opening. The strong opening led to an immediate profit taking from some investors exiting on strength but selling soon dried up and the bulls took over for the rest of the day. Investors' move back into equities today from the low bond yields and high bond prices can be clearly seen from the rising bond yields across the board as investors take bonds profit and back into the low equities prices. Yes, today's rebound is clearly technical in nature as sales figures and new home sales continue to disappoint today. As such, we will not be surprised to see more selling into the strength in the days to come.
Technicals
The Dow rebounded today on the strong 200WMA support along with rising short term bullish momentum as expected. The Dow also formed a nice morning star formation, which is a 3-day reversal candlestick formation(my Star Trading System is created to spot such strong formations automatically), which also completed a short term double bottom formation on good volume. This shows that the Dow might continue this new dead cat bounce for a few days more, probably testing the 30DMA at about 11,700 points. However, unless something changes in the fundamentals, the market might not have the catalyst to turn this intermediate bear trend around yet. As such, such short term bounces still serve more as exit points than entry points.
For now, the Dow turns into a short term neutral trend within an intermediate bear trend and primary bull trend.
Fundamentals
US market opened up to an optimistic start today as global markets continue to climb higher prior to US market opening. The strong opening led to an immediate profit taking from some investors exiting on strength but selling soon dried up and the bulls took over for the rest of the day. Investors' move back into equities today from the low bond yields and high bond prices can be clearly seen from the rising bond yields across the board as investors take bonds profit and back into the low equities prices. Yes, today's rebound is clearly technical in nature as sales figures and new home sales continue to disappoint today. As such, we will not be surprised to see more selling into the strength in the days to come.
Technicals
The Dow rebounded today on the strong 200WMA support along with rising short term bullish momentum as expected. The Dow also formed a nice morning star formation, which is a 3-day reversal candlestick formation(my Star Trading System is created to spot such strong formations automatically), which also completed a short term double bottom formation on good volume. This shows that the Dow might continue this new dead cat bounce for a few days more, probably testing the 30DMA at about 11,700 points. However, unless something changes in the fundamentals, the market might not have the catalyst to turn this intermediate bear trend around yet. As such, such short term bounces still serve more as exit points than entry points.
For now, the Dow turns into a short term neutral trend within an intermediate bear trend and primary bull trend.
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Short Term Rebouding Coming Again
The Dow moved sideways today, closing marginally higher by 37 points.
Fundamentals
Chicago Fed turned in better than expected today before market opened even though it was still a negative number. This, along with the generally more optimistic global sentiment before market opened, took the market higher right from the opening. However, investors seeking to sell on any sign of strength in this weak and uncertain market stepped in right away and took the market all the way downwards right from the higher opening, closing it almost at breakeven for the day. Indeed, investors have not forgotten the generally worsening economic numbers so far and are obviously still seeking to exit the market on any strength strategically.
Technicals
With the Dow's 200WMA acting as support right now, there are obviously some significant strength in this area from the trading action today. In fact, short term bullish momentum is now rising on our short term indicators which could lead the Dow into another short term sideways trend if the market follows up to upside tomorrow. Otherwise, a visit to the 10,000 points area would still be in the books.
For now, the Dow remains in a short term bear trend, intermediate bear trend within a primary bull trend.
Fundamentals
Chicago Fed turned in better than expected today before market opened even though it was still a negative number. This, along with the generally more optimistic global sentiment before market opened, took the market higher right from the opening. However, investors seeking to sell on any sign of strength in this weak and uncertain market stepped in right away and took the market all the way downwards right from the higher opening, closing it almost at breakeven for the day. Indeed, investors have not forgotten the generally worsening economic numbers so far and are obviously still seeking to exit the market on any strength strategically.
Technicals
With the Dow's 200WMA acting as support right now, there are obviously some significant strength in this area from the trading action today. In fact, short term bullish momentum is now rising on our short term indicators which could lead the Dow into another short term sideways trend if the market follows up to upside tomorrow. Otherwise, a visit to the 10,000 points area would still be in the books.
For now, the Dow remains in a short term bear trend, intermediate bear trend within a primary bull trend.
New Bear Trend Coming Up?
Aug 21, 2011
The Dow continued to slump last week amidst worse than expected economic data and global debt issues, retreating 451 points on a week on week basis.
Yes, this bear market isn't just about the credit rating downgrade by Standard & Poor's anymore but also about economic data collapsing back down to about 2009 levels once again. Yes, the US economy is suffering in its path to recovery as financial issues globally and locally hit its economy. However, this phenomena is not a new one as almost all recovery phase enters such a period of uncertainty and retreat from overly optimistic outlook coming from the initial phase of the recovery. We saw that same pattern back in 2004 and 2005 coming off the initial strong recovery in 2003. Yes, this also means that such uncertainty could last a year or more until all the toxic waste of the crisis is totally drained from the economy can a new bull trend start.
On the technical front, the Dow is back down to its 200WMA on the weekly charts. This is an area of strong support/resistance and we could see the Dow recover slightly this week before hitting Thursday's Jobless Claims and Friday's GDP. This is also an extremely dangerous area to close below. As we can see from the past, everytime the Dow breaks below its 200WMA, it goes downwards a lot more. As such, if the Dow fails to hold up at this level, then we would see a good down leg for put options trading.
The Dow continued to slump last week amidst worse than expected economic data and global debt issues, retreating 451 points on a week on week basis.
Yes, this bear market isn't just about the credit rating downgrade by Standard & Poor's anymore but also about economic data collapsing back down to about 2009 levels once again. Yes, the US economy is suffering in its path to recovery as financial issues globally and locally hit its economy. However, this phenomena is not a new one as almost all recovery phase enters such a period of uncertainty and retreat from overly optimistic outlook coming from the initial phase of the recovery. We saw that same pattern back in 2004 and 2005 coming off the initial strong recovery in 2003. Yes, this also means that such uncertainty could last a year or more until all the toxic waste of the crisis is totally drained from the economy can a new bull trend start.
On the technical front, the Dow is back down to its 200WMA on the weekly charts. This is an area of strong support/resistance and we could see the Dow recover slightly this week before hitting Thursday's Jobless Claims and Friday's GDP. This is also an extremely dangerous area to close below. As we can see from the past, everytime the Dow breaks below its 200WMA, it goes downwards a lot more. As such, if the Dow fails to hold up at this level, then we would see a good down leg for put options trading.
Dow Dives on Worse Than Expected Data
The Dow continued its bear trend today on an avalanche of 419 points on the back of disappointing economic data.
Fundamentals
My prediction of worse than expected leading indicators and jobless claims fuelling a new leg down came true today as both jobless claims and Philley Fed surprised to downside. Jobless Claims rose from last week's revised number of 399K to 408K this week while Philley Fed took a dive going from last month's 3.2 to a -30.7, echoing the grim outlook the Empire State Index did on Monday. Like the Empire State Index, this is also the Philley Fed's worst showing since 2009 and together, they cast a grim shadow on the coming ISM index in September. Even though leading indicators turned in better than expected, it did nothing to stop the combined negative effects of the other leading indicators released so far. Investors continued to run back to bonds like a scared bunny in a hysteric trading session while options traders pushed the total equities put call ratio up to a new year high, echoing the negative sentiment. Tomorrow is August options expiration and would certainly be yet another volatile trading day.
Technicals
The Dow resumed jumping out of the window type of bear trend today with a huge dive on strong volume. This, along with the surge in total equities put call ratio usually mean a high probability area of reversal. However, with such strong fundamentals backing today's dive along with the futures already pointing sharply lower after markets, I hesitate to make such a call here unless I see it happen for real. For now, short term support level remains at the 11,000 level the Dow is at now. Breaking which, a revisit to the 10,000 points level would be at hand. Moving down to the 10,000 points area would also take the Dow back to 2009 levels which would coincide with the recent economic data being back where they were during 2009.
For now, the Dow turns a short term bear trend within an intermediate bear trend and primary bull trend.
Fundamentals
My prediction of worse than expected leading indicators and jobless claims fuelling a new leg down came true today as both jobless claims and Philley Fed surprised to downside. Jobless Claims rose from last week's revised number of 399K to 408K this week while Philley Fed took a dive going from last month's 3.2 to a -30.7, echoing the grim outlook the Empire State Index did on Monday. Like the Empire State Index, this is also the Philley Fed's worst showing since 2009 and together, they cast a grim shadow on the coming ISM index in September. Even though leading indicators turned in better than expected, it did nothing to stop the combined negative effects of the other leading indicators released so far. Investors continued to run back to bonds like a scared bunny in a hysteric trading session while options traders pushed the total equities put call ratio up to a new year high, echoing the negative sentiment. Tomorrow is August options expiration and would certainly be yet another volatile trading day.
Technicals
The Dow resumed jumping out of the window type of bear trend today with a huge dive on strong volume. This, along with the surge in total equities put call ratio usually mean a high probability area of reversal. However, with such strong fundamentals backing today's dive along with the futures already pointing sharply lower after markets, I hesitate to make such a call here unless I see it happen for real. For now, short term support level remains at the 11,000 level the Dow is at now. Breaking which, a revisit to the 10,000 points level would be at hand. Moving down to the 10,000 points area would also take the Dow back to 2009 levels which would coincide with the recent economic data being back where they were during 2009.
For now, the Dow turns a short term bear trend within an intermediate bear trend and primary bull trend.
Dead Cat Bounce Ends
The Dow moved sideways today, closing marginally higher by only 4 points as the reality of worsening economic data begin to set in.
Fundamentals
Early strength in the market gave way quickly to an all out short term profit taking as investors sell out of equities and returned to the safety of bonds, depressing bond yields further across the board. Yes, the reality of worsening economic numbers seem to be setting in right now ahead of tomorrow's round of important leading indicators and jobless claims, which will no doubt start a new leg down if they turn in decidedly worse than expected as well. Options traders continue to have no doubt that this is a bearish market by keeping total equities put call ratio above par. My old question remains... with economic performance back down to where it was in 2009, would the stock market go back down to that level as well?
Technicals
Even though the Dow closed higher today, there is little doubt that the dead cat bounce has ended and the next leg forward is downwards. In fact, the Nasdaq Composite, which typically moves ahead of the Dow and S&P500, has already made a significant down day, completing the evening star formation I spoke of yesterday. A negative close tomorrow on the Dow will be the confirming signal. Short term support is around the 10,700 area with a revisit to the 10,000 points area if broken. That will also turn the primary trend around to bearish.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
Fundamentals
Early strength in the market gave way quickly to an all out short term profit taking as investors sell out of equities and returned to the safety of bonds, depressing bond yields further across the board. Yes, the reality of worsening economic numbers seem to be setting in right now ahead of tomorrow's round of important leading indicators and jobless claims, which will no doubt start a new leg down if they turn in decidedly worse than expected as well. Options traders continue to have no doubt that this is a bearish market by keeping total equities put call ratio above par. My old question remains... with economic performance back down to where it was in 2009, would the stock market go back down to that level as well?
Technicals
Even though the Dow closed higher today, there is little doubt that the dead cat bounce has ended and the next leg forward is downwards. In fact, the Nasdaq Composite, which typically moves ahead of the Dow and S&P500, has already made a significant down day, completing the evening star formation I spoke of yesterday. A negative close tomorrow on the Dow will be the confirming signal. Short term support is around the 10,700 area with a revisit to the 10,000 points area if broken. That will also turn the primary trend around to bearish.
For now, the Dow remains in short term neutral trend, intermediate bear trend within a primary bull trend.
Dead Cat Bounce Ending?
The Dow pulled back 76 points on disappointing sales data today, ending the 3-day rally.
Fundamentals
Sales data today turned in worse than expected, leading to a negative opening in the US market. The negative opening was also reinforced by global markets taking a hit on European debt issues before US market opening. Investors also went back into the slightly higher bond yields, depressing bond yields across the board once again while options traders continue to maintain a largely bearish stance with a higher than par total equities put call ratio. The market strengthened in the afternoon, taking it off its lows with the AAA rating affirmation by Fitch. Indeed, Standard & Poor's is only one of many credit rating agencies and is the only one which has downgraded US debt rating so far. Investors are clearly cautious ahead of Thursday's bout of leading indicators and jobless claims report. Economic numbers have been deteriorating the past couple of months and further deterioration in the Thursday numbers would certainly fuel the ongoing bear trend. So far, Monday's Empire State Index has already turned in worse than expected. Indeed, this bear market does have real fundamental issues behind it rather than just a credit downgrade issue.
Technicals
The Dow pulled back slightly today which is typical after such a powerful 700+ points 3 days move. Short term bullish momentum continue to rise into today's move and along with its slightly higher high and higher low, it seems like this dead cat bounce still have a couple of days to go. However, this is also the area in every dead cat bounce where the market could make a nice evening star formation and continue its way downwards, depending on how the next day close. If tomorrow closes higher, then the dead cat could limp along for a couple of days more. If tomorrow closes lower, than odds would be that the market would continue into its bear trend from here. As such, for the short term, the market remains inclined to downside with limited upside potential.
For now, the Dow remains in a short term neutral trend within an intermediate bear trend and primary bull trend.
Fundamentals
Sales data today turned in worse than expected, leading to a negative opening in the US market. The negative opening was also reinforced by global markets taking a hit on European debt issues before US market opening. Investors also went back into the slightly higher bond yields, depressing bond yields across the board once again while options traders continue to maintain a largely bearish stance with a higher than par total equities put call ratio. The market strengthened in the afternoon, taking it off its lows with the AAA rating affirmation by Fitch. Indeed, Standard & Poor's is only one of many credit rating agencies and is the only one which has downgraded US debt rating so far. Investors are clearly cautious ahead of Thursday's bout of leading indicators and jobless claims report. Economic numbers have been deteriorating the past couple of months and further deterioration in the Thursday numbers would certainly fuel the ongoing bear trend. So far, Monday's Empire State Index has already turned in worse than expected. Indeed, this bear market does have real fundamental issues behind it rather than just a credit downgrade issue.
Technicals
The Dow pulled back slightly today which is typical after such a powerful 700+ points 3 days move. Short term bullish momentum continue to rise into today's move and along with its slightly higher high and higher low, it seems like this dead cat bounce still have a couple of days to go. However, this is also the area in every dead cat bounce where the market could make a nice evening star formation and continue its way downwards, depending on how the next day close. If tomorrow closes higher, then the dead cat could limp along for a couple of days more. If tomorrow closes lower, than odds would be that the market would continue into its bear trend from here. As such, for the short term, the market remains inclined to downside with limited upside potential.
For now, the Dow remains in a short term neutral trend within an intermediate bear trend and primary bull trend.
Dead Cat Bounce Continues...
The Dow gained 213 points today despite a far worse than expected Empire State Index.
Fundamentals
US market opened up strongly and continued powering upwards all the way to its close along with a wave of optimism that swept over global markets before US market opening. In fact, the far worse than expected Empire State Index released before market opened today didn't seem to move sentiments one bit. Analysts were expecting the Empire State Index to rebound to a +1.0 from last month's -3.76 but it turned out a grim -7.72 instead. It is the Empire State Index's worst showing since November 2010 and marked the third consecutive negative month. The last time the Empire State Index spent so many months consecutively in negative mode was back in 2009 before the end of the 2008 market crash. Indeed, most heavyweight economic data has fallen back to the pre-recovery state and today's Empire State Index, the first of the 3 major leading indicators for the ISM Index, truly cast a shadow on the next ISM Index. Truly fundamentals are not behind today's move, making it more technical than fundamental in nature. Bond yields rose slightly across the board as investors continue to sell out of the higher bond prices and low bond yields. Total equities put call ratio shows that options traders are still very much in the bearish mood, unmoved by today's "rally".
Technicals
Today's rally is definitely the technical followup to last Friday's move, playing out the dead cat bounce that I mentioned yesterday. Indeed, whenever the market move ahead upwards within an intermediate bear trend on a day of horrendous economic data, it is most likely nothing more than a bull trap or a simple oversold rally. Indeed, with the fading trading volume, it is not hard to see the true nature of this "rally". The Dow would need to test and break its 30MA once again before it can resume its bull trend. For now, odds continue to favor a failure at that level and a continuation of the intermediate bear trend until economic data start to recover.
For now, the Dow turns a short term bull trend within an intermediate bear trend within a primary bull trend.
Fundamentals
US market opened up strongly and continued powering upwards all the way to its close along with a wave of optimism that swept over global markets before US market opening. In fact, the far worse than expected Empire State Index released before market opened today didn't seem to move sentiments one bit. Analysts were expecting the Empire State Index to rebound to a +1.0 from last month's -3.76 but it turned out a grim -7.72 instead. It is the Empire State Index's worst showing since November 2010 and marked the third consecutive negative month. The last time the Empire State Index spent so many months consecutively in negative mode was back in 2009 before the end of the 2008 market crash. Indeed, most heavyweight economic data has fallen back to the pre-recovery state and today's Empire State Index, the first of the 3 major leading indicators for the ISM Index, truly cast a shadow on the next ISM Index. Truly fundamentals are not behind today's move, making it more technical than fundamental in nature. Bond yields rose slightly across the board as investors continue to sell out of the higher bond prices and low bond yields. Total equities put call ratio shows that options traders are still very much in the bearish mood, unmoved by today's "rally".
Technicals
Today's rally is definitely the technical followup to last Friday's move, playing out the dead cat bounce that I mentioned yesterday. Indeed, whenever the market move ahead upwards within an intermediate bear trend on a day of horrendous economic data, it is most likely nothing more than a bull trap or a simple oversold rally. Indeed, with the fading trading volume, it is not hard to see the true nature of this "rally". The Dow would need to test and break its 30MA once again before it can resume its bull trend. For now, odds continue to favor a failure at that level and a continuation of the intermediate bear trend until economic data start to recover.
For now, the Dow turns a short term bull trend within an intermediate bear trend within a primary bull trend.
Dead Cat Bounce Starts?
The Dow rallied 125 points last Friday, ending the week down by a net total of 175 points with a price range of 830 points! Indeed, last week was a volatile week never before seen in the history of the Dow.
Last Friday's "rally" was of a more technical nature than anything fundamental. Nothing in the economic data or news last Friday could have contributed to such a move. Indeed, with bond yields that low and significant strength witnessed around this level due to bargain hunting all week long, it is easy to convince investors into a short term buying spree within a strong intermediate bear trend, aka Dead Cat Bounce. Indeed, last Friday's followup to Thursday's 423 points rally was a critical one in order to get the dead cat bounce going.
On the technical front, short term bullish momentum is also rising out of a grossly oversold market, supporting the coming short term dead cat bounce. Yes, a rally like this out of a grossly oversold area within a strong intermediate bear trend supported by strong bearish fundamentals can mean nothing more than a dead cat bounce unless something significant changes on the fundamental front. Indeed, it will take significant developments on the fundamental front to turn this bear market around for real.
It is leading indicators week this week with Empire State Index on Monday as well as Philley Fed and Leading Indicators on Thursday (see Stock Market Calendar). I would expect that even if these numbers beat expectation, it would only serve to feed the Dead Cat Bounce rather than turn the market around.
Last Friday's "rally" was of a more technical nature than anything fundamental. Nothing in the economic data or news last Friday could have contributed to such a move. Indeed, with bond yields that low and significant strength witnessed around this level due to bargain hunting all week long, it is easy to convince investors into a short term buying spree within a strong intermediate bear trend, aka Dead Cat Bounce. Indeed, last Friday's followup to Thursday's 423 points rally was a critical one in order to get the dead cat bounce going.
On the technical front, short term bullish momentum is also rising out of a grossly oversold market, supporting the coming short term dead cat bounce. Yes, a rally like this out of a grossly oversold area within a strong intermediate bear trend supported by strong bearish fundamentals can mean nothing more than a dead cat bounce unless something significant changes on the fundamental front. Indeed, it will take significant developments on the fundamental front to turn this bear market around for real.
It is leading indicators week this week with Empire State Index on Monday as well as Philley Fed and Leading Indicators on Thursday (see Stock Market Calendar). I would expect that even if these numbers beat expectation, it would only serve to feed the Dead Cat Bounce rather than turn the market around.
12000 or 10000 Points Ahead?
The Dow rallied 423 points today as it continue its extremely volatile short term sideways movement of 400+ points per day up and down.
Fundamentals
Investors jumped on the better than expected Jobless Claims today as it reinforces last Friday's better than expected Jobs Report, creating a picture of recovering jobs market. Yes, a better jobs market is the start of every economic boom. Investors took the opportunity to exit the extremely low bonds yield and back into equities today, creating a surge in bond yields across the board. Does it feel weird that investors still jumped back into bonds over the past week on debt DOWNGRADE, punishing company shares to buy the exact bonds that got downgraded? Well, this shows that investors do not see US debt being downgraded all the way to junk and going into default. Investors still expect to receive their money on these bonds despite the downgrade but the impact such a downgrade has on the economy and equities market is of more immediate concern. That's why weighing the two evils, investors would still run for bonds despite a bond rating downgrade. The recent recovery in the jobs market data could spur a short rally from here onwards until the next bad news on the debt front hit the wire. Indeed, it is still a news driven speculative market and any short term or mid term predictions based on existing news cannot be relied on too heavily as you will never know when the next market moving news will hit the wire.
Technicals
The past week has been one of the most volatile in the history of the Dow, moving up and down over 400 points every day. However, even though the movements are huge, the trend isn't. The past week has seen the market move largely in a sideways trend with the Dow recovering and losing the same 400+ points every day. However, what's interesting is the rising short term bullish momentum which may usher in the start of a short term dead cat bounce. However, for a dead cat bounce to start, the Dow needs to follow up tomorrow and beat the Monday high in order to complete a short term turn around. If it continue to go down 400+ points tomorrow, then the chances of a dead cat bounce would diminish. If a dead cat bounce happen, resistance level would be at the 200MA at about 12,000. If not, then a visit to the 10,000 points support would still be in the books.
For now, the Dow remains in short term and intermediate term bear trend within a primary bull trend.
Fundamentals
Investors jumped on the better than expected Jobless Claims today as it reinforces last Friday's better than expected Jobs Report, creating a picture of recovering jobs market. Yes, a better jobs market is the start of every economic boom. Investors took the opportunity to exit the extremely low bonds yield and back into equities today, creating a surge in bond yields across the board. Does it feel weird that investors still jumped back into bonds over the past week on debt DOWNGRADE, punishing company shares to buy the exact bonds that got downgraded? Well, this shows that investors do not see US debt being downgraded all the way to junk and going into default. Investors still expect to receive their money on these bonds despite the downgrade but the impact such a downgrade has on the economy and equities market is of more immediate concern. That's why weighing the two evils, investors would still run for bonds despite a bond rating downgrade. The recent recovery in the jobs market data could spur a short rally from here onwards until the next bad news on the debt front hit the wire. Indeed, it is still a news driven speculative market and any short term or mid term predictions based on existing news cannot be relied on too heavily as you will never know when the next market moving news will hit the wire.
Technicals
The past week has been one of the most volatile in the history of the Dow, moving up and down over 400 points every day. However, even though the movements are huge, the trend isn't. The past week has seen the market move largely in a sideways trend with the Dow recovering and losing the same 400+ points every day. However, what's interesting is the rising short term bullish momentum which may usher in the start of a short term dead cat bounce. However, for a dead cat bounce to start, the Dow needs to follow up tomorrow and beat the Monday high in order to complete a short term turn around. If it continue to go down 400+ points tomorrow, then the chances of a dead cat bounce would diminish. If a dead cat bounce happen, resistance level would be at the 200MA at about 12,000. If not, then a visit to the 10,000 points support would still be in the books.
For now, the Dow remains in short term and intermediate term bear trend within a primary bull trend.
Dead Cat Bounce?
The Dow rallied 429 points today on the Fed's promise to keep interest rates at the present low level all the way to 2013.
Fundamentals
Investors were expecting the Fed to do something more than this and was actually slightly disappointed by the release at 2:15pm, leading to significant selloff. However, the reality of the news soon set in and spurred bargain hunters to step in, lifting the market all the way to its close. Indeed, investors have been worried about the Feds raising rates for a while now and this promise really take that concern away and give the bulls some reason to celebrate. However, that didn't stop some investors from selling on the strength and returning to bonds, depressing bond yields significantly across the board once again. Indeed, times like this makes alot of investors sell on the strength. In fact, total equities put call ratio surged to a high unmatched since Sep 2008, which ushered in the final down leg of the 2008 crisis. Clearly, it is still a scared market with plenty of investors selling into any bit of strength. However, the sense of the market being short term oversold is also overwhelming in the market and it would not be strange to see a couple of days of dead cat bounce from here. Yes, the cat remains dead until something significant changes in the fundamentals of the economy, which remains extremely weak right now. Yes, we are in a news/events driven market now and every new development on the significant issues will change the outlook of the market. Such is the kind of market to be investing for the long term (5 to 10years) on significant retreats, very nimble day traders who can react instantly to breaking news or sensible people who just want to stay on the sidelines for now (At least that's what my Star Trading System is doing right now).
Technicals
Today's rebound is indeed a good get out time for short term traders who has yet to cut loss. Why? Because even though today's rally was a significant one under normal market condition, its 400+ points fade in comparison with yesterday's 600+ points drop and continues to make a lower high and a lower low. Unless the market follow up with a significant rally beating the high of yesterday's 600+ points candle, today's rally means nothing and the retest of the 10,000 points support level stands. Even if tomorrow ends up positive, it could still be a short term dead cat bounce that does nothing more than create a week or so of excitement before turning back down lower. As such, any strength remains a good time for getting out of longs so that you can wait out the uncertainty. Yes, it is an intermediate bear trend now and inclination will remain bearish until something significant changes in the economy and the charts.
For now, the Dow remains in short term and intermediate term bear trend within a primary bull trend.
Fundamentals
Investors were expecting the Fed to do something more than this and was actually slightly disappointed by the release at 2:15pm, leading to significant selloff. However, the reality of the news soon set in and spurred bargain hunters to step in, lifting the market all the way to its close. Indeed, investors have been worried about the Feds raising rates for a while now and this promise really take that concern away and give the bulls some reason to celebrate. However, that didn't stop some investors from selling on the strength and returning to bonds, depressing bond yields significantly across the board once again. Indeed, times like this makes alot of investors sell on the strength. In fact, total equities put call ratio surged to a high unmatched since Sep 2008, which ushered in the final down leg of the 2008 crisis. Clearly, it is still a scared market with plenty of investors selling into any bit of strength. However, the sense of the market being short term oversold is also overwhelming in the market and it would not be strange to see a couple of days of dead cat bounce from here. Yes, the cat remains dead until something significant changes in the fundamentals of the economy, which remains extremely weak right now. Yes, we are in a news/events driven market now and every new development on the significant issues will change the outlook of the market. Such is the kind of market to be investing for the long term (5 to 10years) on significant retreats, very nimble day traders who can react instantly to breaking news or sensible people who just want to stay on the sidelines for now (At least that's what my Star Trading System is doing right now).
Technicals
Today's rebound is indeed a good get out time for short term traders who has yet to cut loss. Why? Because even though today's rally was a significant one under normal market condition, its 400+ points fade in comparison with yesterday's 600+ points drop and continues to make a lower high and a lower low. Unless the market follow up with a significant rally beating the high of yesterday's 600+ points candle, today's rally means nothing and the retest of the 10,000 points support level stands. Even if tomorrow ends up positive, it could still be a short term dead cat bounce that does nothing more than create a week or so of excitement before turning back down lower. As such, any strength remains a good time for getting out of longs so that you can wait out the uncertainty. Yes, it is an intermediate bear trend now and inclination will remain bearish until something significant changes in the economy and the charts.
For now, the Dow remains in short term and intermediate term bear trend within a primary bull trend.
US Debt Downgrade... US Market In Uncharted Territory
The Dov halted its landslide last Friday with a 60 points rally on the much better than expected Jobs Report. Indeed, the jobs market seems to have improved more than analysts have expected and a better jobs market is the prerequisite to any economic recovery.
However, just when the market is ready to price in the better outlook, S&P500 has to cut US debt rating one notch down from AAA to AA+ after market close. Indeed, like some high profile analysts said, there cannot be a worse timing for such a debt rating cut. Just when investors were ready to celebrate on the jobs report and better economic outlook, the debt rating cut hit their heads like a mallet on a mole. In fact, index futures are pointing sharply lower already, and Monday is expected to be another massacre unless the White House come up with something quickly. There is no doubt it would already be a bloodbath in the Asian `nd European markets before US market open.
This debt rating cut is a historical event which has never happened before and investors usually have only one response to never-before events... RUN. Indeed, the US debt issue is a serious one that could hamper all efforts to rebuild its economy. So far, the Dow has broken every single reliable support and short term bottoming signal so we are in uncharted territory now, both on the technical and fundamental front. Not even during the 2008 bear market did we see such a strong and continuous beat down, not even during the 2008 financial crisis was US debt rating downgraded. As such, there is no reliable historical reference in the US market for such events occurring. A look at the debt downgrades in other countries seem to indicate stock market recovery shortly after such a downgrade but how much does the behavior in those market correlate with the much more complex stock market of the biggest economy of the world? I do not dare draw such linear relationship. In fact, the market is at a juncture where is it too deeply oversold to start going short and too much negativity to start going long. Yes, an extremely tricky market now and no doubt a market for speculators who will be greatly rewarded for their correct "predictions".
However, just when the market is ready to price in the better outlook, S&P500 has to cut US debt rating one notch down from AAA to AA+ after market close. Indeed, like some high profile analysts said, there cannot be a worse timing for such a debt rating cut. Just when investors were ready to celebrate on the jobs report and better economic outlook, the debt rating cut hit their heads like a mallet on a mole. In fact, index futures are pointing sharply lower already, and Monday is expected to be another massacre unless the White House come up with something quickly. There is no doubt it would already be a bloodbath in the Asian `nd European markets before US market open.
This debt rating cut is a historical event which has never happened before and investors usually have only one response to never-before events... RUN. Indeed, the US debt issue is a serious one that could hamper all efforts to rebuild its economy. So far, the Dow has broken every single reliable support and short term bottoming signal so we are in uncharted territory now, both on the technical and fundamental front. Not even during the 2008 bear market did we see such a strong and continuous beat down, not even during the 2008 financial crisis was US debt rating downgraded. As such, there is no reliable historical reference in the US market for such events occurring. A look at the debt downgrades in other countries seem to indicate stock market recovery shortly after such a downgrade but how much does the behavior in those market correlate with the much more complex stock market of the biggest economy of the world? I do not dare draw such linear relationship. In fact, the market is at a juncture where is it too deeply oversold to start going short and too much negativity to start going long. Yes, an extremely tricky market now and no doubt a market for speculators who will be greatly rewarded for their correct "predictions".
Dow Turns Negative For 2011
The Dow took a crippling blow in the jaw today, closing down by a huge 512 points today even though Jobless Claims was better than expected.
Fundamentals
If Tuesday was a slaughter, today's definitely a massacre in the US market. Market opened down and went downwards decisively even though Jobless Claims was slightly better than expected. Analysts were expecting Jobless Claims to turn in a higher 403K but it turned out to be slightly lower at 400K. However, this number is still higher than last week's 398K. This might have put investors on the defensive against tomorrow's Jobs Report. Investors rushed for the safety of bonds today like scared rabbits, depressing bond yields across the board by a leap. Indeed, it felt totally like doomsday in the market today, everything from stocks to gold and oil were affected. In fact, today's drop also took 2011 into an overall loss. Fortunate are those who has "Sold In May and Went Away". Analysts are expecting an increase in nonfarm payroll in tomorrow's jobs report, which will definitely be destructive to the market if disappointed. However, a positive surprise on that front may be the catalyst needed to halt this seemingly unstoppable avalanche.
Technicals
So far, this avalanche has broken many technical short term bottoming indications such as the "Dragon tail formation" I mentioned to paid subscribers yesterday, the 200MA, the volatile sideways channel and even the VIX indication, turning the intermediate trend to bearish. However, just when I was about to be convinced that this bear trend has legs, today's blow off day caught my attention again. It was a strong volume surge with a strong big down candle. Such huge blow off days occurring at the end of significant down trends usually suggest that the last of the sellers had lept into the market, what is known as a "Last Gasp Selling" and that prices may be attractive enough for people to start buying into. We saw the same thing back in 2008 near the bottom of the big bear trend. However, even if it does rebound from this level, it could still amount to a bull trap unless it test and breakout of the 200MA at about 12000. For now, it is still a volatile events driven market that can move dramatically in either direction depending how global issues work out.
For now, the Dow remains in a short term bear trend within an intermediate term bear trend within a primary bull trend.
My Market Analysis Sent Straight Into Your Email Daily For Only $5/Month! **My analysis will only be posted here once every other day.
Fundamentals
If Tuesday was a slaughter, today's definitely a massacre in the US market. Market opened down and went downwards decisively even though Jobless Claims was slightly better than expected. Analysts were expecting Jobless Claims to turn in a higher 403K but it turned out to be slightly lower at 400K. However, this number is still higher than last week's 398K. This might have put investors on the defensive against tomorrow's Jobs Report. Investors rushed for the safety of bonds today like scared rabbits, depressing bond yields across the board by a leap. Indeed, it felt totally like doomsday in the market today, everything from stocks to gold and oil were affected. In fact, today's drop also took 2011 into an overall loss. Fortunate are those who has "Sold In May and Went Away". Analysts are expecting an increase in nonfarm payroll in tomorrow's jobs report, which will definitely be destructive to the market if disappointed. However, a positive surprise on that front may be the catalyst needed to halt this seemingly unstoppable avalanche.
Technicals
So far, this avalanche has broken many technical short term bottoming indications such as the "Dragon tail formation" I mentioned to paid subscribers yesterday, the 200MA, the volatile sideways channel and even the VIX indication, turning the intermediate trend to bearish. However, just when I was about to be convinced that this bear trend has legs, today's blow off day caught my attention again. It was a strong volume surge with a strong big down candle. Such huge blow off days occurring at the end of significant down trends usually suggest that the last of the sellers had lept into the market, what is known as a "Last Gasp Selling" and that prices may be attractive enough for people to start buying into. We saw the same thing back in 2008 near the bottom of the big bear trend. However, even if it does rebound from this level, it could still amount to a bull trap unless it test and breakout of the 200MA at about 12000. For now, it is still a volatile events driven market that can move dramatically in either direction depending how global issues work out.
For now, the Dow remains in a short term bear trend within an intermediate term bear trend within a primary bull trend.
My Market Analysis Sent Straight Into Your Email Daily For Only $5/Month! **My analysis will only be posted here once every other day.
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