Stock Market Analysis

Wednesday, May 31, 2006

Daily Market Comments 1 June 06

The markets rebounced yesterday into a moderate up day. DJIA was up 0.67% and NASDAQ was up similarly by 0.65%. This advance have been broadbased with DJIA but marginal with NASDAQ. There are no significant events explaining this small rebound except for the fact that oil continue to stay low and trade lower.

Technically, we see that the drop on Tuesday have eliminated the optimism and certainty of a rally. The markets have been up moderately yesteraday but has yet to regain lost grounds. These 2 days will be critical for the market to tell us where exactly is it going.

Daily Market Comments 30 May 06

An unexpected drop in the markets yesterday. Eventhough it is a drop, it does not change the fact that the market may still be strong to upside. Oil prices seem to be holding steadily below $70 and that should give a necessary boost to the markets soon.

Saturday, May 27, 2006

Daily Market Comments 28 May 06

Its been a full week since I was sick and bedridden. I am truly sorry to all readers of this blog that I was unable to analyse the market and give you my updates. For those of you who continue to give me your support, I give you my sincere thanks.

Along with the recovery of my illness, the markets recovered slightly from its recent ditch. All signs look good for the market to recover with oil prices coming under control. Next week will truly set the pace for either a market recovery or a sideways consolidation.

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Thursday, May 18, 2006

Daily Market Comments 19 May 06 by

A very disappointing day in the markets yesterday. The market was extremely resilient for most part of the day to finally collaspe under presure to close down. DJIA was down once again by 0.69% and NASDAQ down by another 0.70%. There is still sure signs of the bearish spree coming to an end though from the slow down in decline and the decreasing number of decliners.

Technically, we see a very depressing picture. NASDAQ broke the 2,200 support level into the dangerous realm of the unknown. DJIA broke 11,200 support to head towards the 11,000 support. 2 areas of study gives us some light at the end of this gloomy tunnel though.

1. The VIX is at its high of last October again. When VIX was this high last October, the markets went into a 2 months rally. Will it happen again this time?

2. Pre market futures continue to point higher indicating an underlying bullish sentiment forming up.

But the markets have surprised us badly so far... lets see if we can be pleasantly surprised this time round.

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Wednesday, May 17, 2006

Daily Market Comments 18 May 06 by

Markets dropped like an earthquake yesterday as DJIA dropped by 1.88% and NASDAQ by 1.5%. This is a broad based decline with decliners beating advancers in the ratio of over 70:30. Higher than expected inflation numbers sparking further interest rate rise fears have caused these series of drops even though oil prices are dropping almost every day as we speak.

Technically, we see NASDAQ losing ground unexpectedly as it fails to establish a support level. It is like a mountain climber losing its last foot hold... DJIA broke its 30MA decisively to downside. Both indexes look like there are more downside to come with the only consolation being that both indexes have reached deep oversold levels on stochastics. Well, the markets always surprise us especially when sentiments are widely in one direction. Lets see if we can experience another surprise soon.

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Tuesday, May 16, 2006

Daily Market Comments 17 May 06 by

A largely neutral day in the markets yesterday with DJIA closing down marginally by 0.08% and NASDAQ closing down by 0.42%. Markets are probably waiting for today's CPI numbers to set a definite tone to it.

Technically, we see DJIA bouncing off the 30MA nicely and formed a higher high and a higher low. This is definitely a bullish sign and we should see more upside. NASDAQ continued to wrestle for a handhold between 2220 and 2240. Chances are good for it to find a support level right about here.

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Monday, May 15, 2006

Daily Market Comments 16 May 06 by

The market closed mixed today after a series of drops over the past few days. DJIA closed up by 0.42% and NASDAQ closed down marginally by 0.23%. Decliners still beat advancers today as the last of the bears starts to dissipitate. The markets look like its reacting to the declining oil prices at last.

Technically, yesterday's market behaviour has no big surprise. DJIA realised its "Basket Ball" game plan as it bounces off its 30MA nicely and NASDAQ found a support level at about 2240. Overall, it looks like the markets are ready for an accumulation at these points.

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Sunday, May 14, 2006

Daily Market Comments 15 May 06 by

Weakness continued in the markets last Friday with DJIA down 1.04% and NASDAQ down 1.27%. That was a broad based continuation of the drop that started on Thursday. The drop in oil prices failed to make an impact on the markets as interest rate hike fears reach a climax.

Technically, we see DJIA following the old "basket ball" game plan of bouncing off its 30MA before making new highs. This time round, it still seem like that game plan is very much intact. NASDAQ broke its channel behaviour completely and is now a wild bear on the run. It has reached its March lows and there is no telling if it will go further down unless it finds a support level quickly within these 2 days.

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Thursday, May 11, 2006

Daily Market Comments 12 May 06 by

A SURPRISINGLY Hard drop in the markets yesterday! DJIA Closed down 1.22% and NASDAQ closed down by 2.07% All in one day! This is the hardest drop in the market since the mid January drop. There are little fundamental reasons that I can find to explain this drop except to go with the renewed interest rate hike fears and the extraction of the already priced in optimistic expectation on the fed release. However, if that is true, why didn't it happen the day before when the feds released the news? Oil prices are back up but the market hardly reacted half this strongly when oil prices are way higher than it closed yesterday.

Well, maybe none of these are as important as where the markets might probably go after such a ditch... let's look back in time... when DJIA and NASDAQ did a similar ditch on 19 January 2006, the markets accumulated straight away and closed prices back up where the ditch begun within a few days. Looking back on Mid October 2005, we see a hard series of single day drops which not only did not bring the markets very much lower, but gave it enough reason for a strong accumulation right through December 2005. The same thing happened in End June/ Early July 2005. Even as early as mid April 2005 where we experienced a 3 days hard drop, the markets accumulated and closed prices back up within a month or so.

So, the mystery starts... will the markets behave as it has always been? It's hard to say since a lot of investors all over the world are making similar research even as we speak.

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Wednesday, May 10, 2006

Daily Market Comments 11 May 06 by

Not surprisingly, the Feds did raise interest rates to a new 5 years high to 5%. What's surprising is that the markets took it pretty well with DJIA closing marginally higher by 0.2% and NASDAQ coming down by 0.75%.

Technically, we see a neutral day for DJIA maintaining status quo and NASDAQ surprisingly retreated from the 2340 mark. Could this be a start of a downwards channel or a tighter 2300 - 2340 channel for NASDAQ? Let's see what answers will be revealed over the next few days.

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Tuesday, May 09, 2006

Daily Market Comments 10 May 06 by

A mixed market yesterday with a hint of bullishness during the last hour. DJIA closed up 0.48% and NASDAQ was down marginally by 0.29%. It does seem like investors are optimistic about what the Feds are going to do and displayed that confidence in pushing DJIA into a fresh 6 years high. This is despite a rebound in oil prices, as we have predicted yesterday, putting USO up 0.77% to close at $68.40.

Technically, we see DJIA continuing its bullish run with strength making higher high and higher lows. This is a great sign for the bullishness to continue but it will not be strange should it decide to correct down to it 30MA again before dashing for new highs. We see NASDAQ continuing to linger around the 2340 point. It is indeed a critical point for NASDAQ as it can go either way from here... up to the top of its current 2,380 - 2,300 channel or go back down to the 2,300 line. To some extend, I think the market today will be more fundamentally driven due to the Fed releases than technically driven.

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Monday, May 08, 2006

Daily Market Comments 9 May 06 by

A neutral day at the markets yesterday with DJIA up marginally by 0.06% and NASDAQ by 0.10%. Oil prices continue to fall for a 4th consecutive day but USO managed to hang right about its $68.00 support level, closing at $67.88. Looks like the markets are getting ready to see a possible bounce back in oil prices and the coming FOMC meeting on Wednesday. It does seem like no matter how certain an interest rate hike looks now, it will put a downward pressure on the markets. Lets hold on and see what happens.

Technically, DJIA's slow down after the rally the day before is completely expected. With the index at such high levels, it is not surprising should it go sideways again until either the bull or the bears win this tug of war. NASDAQ continued trading within its neutral sideways price channel without any surprise. Markets are expected to be pretty slow right up to the FOMC meetings and we should all sit tight, fasten our seat belts as well.

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Sunday, May 07, 2006

Daily Market Comments 8 May 06 by

The strength in the markets continued last Friday with DJIA closing up significantly by 1.21% and NASDAQ up by 0.8% giving an overall weekly gain of 1.05% for DJIA and 0.4% for NASDAQ. Overall, the DJIA was bullish last week while NASDAQ was neutral at best. So much for all the great economic data. The indexes have done extremely well on those data and a controlled oil price. The ETF for oil, USO, continue to fall for a third consecutive day down to its $68.00 support level. It will not be surprising if oil starts to move up again from this point. In fact, this is a good point to buy in on oil using the USO ETF. Lets see if the bullish sentiments can persist this week.

Technically, DJIA did a upside breakout last Friday. That breakout broke the sideways movement that the DJIA have been doing all week. This breakout allowed the DJIA to continue its "basket ball" movement to upside bouncing off the 30MA everytime. It sure does look like it is going to do the same again soon and so a slight correction to downside will not be surprising. Overall, DJIA is maintaining a rising trend line and a rising channel line which is very healthy for a bullish market. NASDAQ continue its upwards movement within the 2,300 , 2,360 channel without surprise. We should see it moving up towards the 2360 mark before a slight correction happens. Overall, the sentiments on both indexes are still bullish and a few more days of upside should not be surprising if the possible rise in oil prices do not put too much pressure on the markets.

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Thursday, May 04, 2006

Daily Market Comments 5 May 06 by

Oil prices continues to fall by over $2 yesterday, combined with a greater than expected labor numbers resulted in a broadbased rally in the markets. DJIA was up again by 0.34% and NASDAQ was up decisively at last by 0.87%.

Technically, Both indexes behaved in a somewhat predictable fashion. DJIA closed within the intraday range of 2 days ago with a higher high and higher low. Although a neutral day for DJIA at best, it does continue to give force to its upwards inclination. NASDAQ bounced off its 2,300 support level as predicted yesterday and should see more upside today.

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Wednesday, May 03, 2006

Daily Market Comments 4 May 06 by

Markets closed neutral with DJIA down marginally by 0.14% and NASDAQ down marginally by 0.25%. There were no clear leadership in yesterday's marginal decline and Advancers / Decliners were almost equally matched. Investors sentiments are still mixed about what to think about the current market conditions... on one hand we have great economy data and the other hand, fear of rising interest rate. Well, looking back on the years of interest rate hikes, we see that the market has been on the up and up and my guess is that with the economy doing great, higher interest rates will be digested some day.

Technically, we see no change in the way both DJIA and NASDAQ are moving. DJIA ended the day with an intraday range almost identical to the day before and continued the neutral sideways movement. NASDAQ, although down is still well supported by the 2,300 support level. Today will be critical for NASDAQ. IF it does not bounce off the 2,300 level decisively, we might have ourselves a down trend on NASDAQ.

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Tuesday, May 02, 2006

Daily Market Comments 3 May 06 by

Markets ended in an up day yesterday. The great economic data are beginning to set in at last and the markets made a broad based advance. DJIA closed at into its 6 years high up 0.64% and NASDAQ closed up 0.22%.

Technically, the "rally" yesterday was more of a neutral continuation of both index's previous trends. DJIA continued to move sideways within its 11479, 11250 channel with inclination to upside and NASDAQ consolidated from the bottom of its neutral price channel. All in all no surprises yet but markets could be inclined to upside if strength prevails in the markets today.

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Monday, May 01, 2006

Daily Market Comments 2 May 06 by

Early gains collasped during the last hour as the Fed's clarified their position on interest rate hikes... it is going to happen afterall! DJIA closed down 0.21% and NASDAQ finished down 0.77%. It seems like the better the economic data, the higher the chance of sustained interest rates hike and the greater the pressure on the markets. But looking at the indexes over the past year, what do we see? Yes, the market has been rising! Even though interest rates have been rising whole year long and oil prices hitting new highs, markets are up overall. This proves that the markets are getting stronger with each measure taken by the government and that short term fears do not over shadow long term fundamental strength.

Technically, we see DJIA in another neutral, sideways day. No big surprises there and we are certainly waiting for the move that will decide where it wants to go. Even though NASDAQ was down pretty hard, we see that it is still trading within the 2300, 2380 neutral price channel. We should see a consolidation at these levels tomorrow.

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