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.
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.
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