The Dow made a small negative day today as I have predicted in yesterday's email to paid subscribers, closing downwards marginally by 15 points.
Fundamentals
Market was slightly negative today as Existing home sales turned in worse than expected. However, optimism is clearly very much in the air as the news failed to affect the market very much. In fact, bond yields rose across the board today strongly as investors reallocate back into equities and options traders continued to keep the total equities put call ratio in favor of Call Options trading. The VIX also dropped today even though the market was down. Whenever the VIX drop on a negative day, it is a signal that the market might turn bullish again as soon as the very next day. This has the same leading effect as the VIX rising on a positive day. Perhaps positive surprises in tomorrow's Jobless Claims, Philley Fed and Leading Indicators would fuel the optimism.
Technicals
The Dow pulled back today slightly as I have expected. Indeed, a couple of sideways or slightly negative days following huge single day rallies are to be expected as traders take short term profit off the table. In fact, with the evidences so far, it seems like the market could regain its bullishness as early as tomorrow. Yes, the reversal out of the intermediate correction is now complete so let's look forward to a new leg upwards.
For now, the Dow remains in a short term neutral trend in an intermediate term neutral trend within a primary bull trend.
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30MA Tested...
The Dow continued downwards by 94 points on potential US debt problem.
Fundamentals
Market was decidedly negative right off the gate on talks of US debt problem all through the weekend. In fact, the Dow went as low as 183 points lower intraday before bargain hunting set in to bring it off its low. Even though it was a decidedly negative day, there wasn't much reaction from the bond yield curve and total equities put call ratio to support the negativity. Long term bond yields actually rose as investors put their long term investments back into equities. Options traders actually moved the total equities put call ratio down below par in favor of call options trading. This shows that even though there are fundamental concerns in the economy, technical bargain hunting is evident and investors might be seeing value at the current levels.
Technicals
Both the Dow and the S&P500 bounced off their respective 30MAs intraday today which could turn out to be the retest of the 30MA I have been talking about recently. Indeed, such hammer formations are typical of short term reversals especially around the 30MA. However, we will still need to see a good follow up tomorrow in order to confirm this. However, it is of little doubt that investors are ready and willing to buy and that supports the long term bull trend scenario.
For now, the Dow remains in a short term bear trend in an intermediate term neutral 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
Market was decidedly negative right off the gate on talks of US debt problem all through the weekend. In fact, the Dow went as low as 183 points lower intraday before bargain hunting set in to bring it off its low. Even though it was a decidedly negative day, there wasn't much reaction from the bond yield curve and total equities put call ratio to support the negativity. Long term bond yields actually rose as investors put their long term investments back into equities. Options traders actually moved the total equities put call ratio down below par in favor of call options trading. This shows that even though there are fundamental concerns in the economy, technical bargain hunting is evident and investors might be seeing value at the current levels.
Technicals
Both the Dow and the S&P500 bounced off their respective 30MAs intraday today which could turn out to be the retest of the 30MA I have been talking about recently. Indeed, such hammer formations are typical of short term reversals especially around the 30MA. However, we will still need to see a good follow up tomorrow in order to confirm this. However, it is of little doubt that investors are ready and willing to buy and that supports the long term bull trend scenario.
For now, the Dow remains in a short term bear trend in an intermediate term neutral 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.
End Of Pullback?
The Dow made a slight pullup today, closing higher by 44 points as some investors buy into the Fed's easing promise.
Fundamentals
Investors ended a lackluster morning and bought into the market in force after Bernanke's promise of further easing, pushing the Dow higher by more than a hundred points. However, the strength quickly dissipated as profit taking took over the rest of the day, taking the market to close much lower. Of note, the VIX once again closed higher despite a higher close in the market. The VIX should move in opposite direction to the S&P500 under normal conditions. Whenever the VIX rise on a higher S&P500, a sell off typically happens within a couple of days. The last time this happened was back in July 6 which started this correction just 2 days later. Investors were obviously cautious ahead of tomorrow's Jobless Claims as analyst's expectation of a much lower number seems to be setting up for a disappointment.
Technicals
Even though the Dow closed higher today, it closed within the lower half of yesterday's trading range, making it more of a sideways day than an up day. A strong up day within a strong short term down trend is totally normal and actually sets it up to move on lower over the next few days. None of my short term indicators show any change in short term bearish momentum and with supporting evidence from the VIX, there is no doubt the Dow is going to continue on towards its 30MA.
For now, the Dow remains in a short term bear trend in an intermediate term neutral 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
Investors ended a lackluster morning and bought into the market in force after Bernanke's promise of further easing, pushing the Dow higher by more than a hundred points. However, the strength quickly dissipated as profit taking took over the rest of the day, taking the market to close much lower. Of note, the VIX once again closed higher despite a higher close in the market. The VIX should move in opposite direction to the S&P500 under normal conditions. Whenever the VIX rise on a higher S&P500, a sell off typically happens within a couple of days. The last time this happened was back in July 6 which started this correction just 2 days later. Investors were obviously cautious ahead of tomorrow's Jobless Claims as analyst's expectation of a much lower number seems to be setting up for a disappointment.
Technicals
Even though the Dow closed higher today, it closed within the lower half of yesterday's trading range, making it more of a sideways day than an up day. A strong up day within a strong short term down trend is totally normal and actually sets it up to move on lower over the next few days. None of my short term indicators show any change in short term bearish momentum and with supporting evidence from the VIX, there is no doubt the Dow is going to continue on towards its 30MA.
For now, the Dow remains in a short term bear trend in an intermediate term neutral 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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