Daily US Market Comments 22 Sep 2006 by MastersoEquity.com
Markets corrected slightly yesteday as expected as the Dow comes against a strong historical high resistance level. Also in the spotlight was the slight recovery in oil price by the end of yesterday. That combined with the all time high concerns brewed the perfect cocktail for the slight consolidation that we saw yesterday. With a lack of leadership to downside, it is hard to conclude if this is a start of a short term correction. The S&P500 had also made 5 years high the day before and again, it is not strange to see heavy profit taking at these levels.
TECHNICALS
A definite down day yesterday as the Dow lost over a hundred points intraday. Both NASDAQ and the Dow ended the day in bearish engulf formations. This is a formation which completely obliterates the optimism the day before and puts the market at risk of a correction from this point onwards especially with their overbought positions and proximity to resistance levels. We are about to enter into a region where no man has ever been to... the Dow all time high and that definitely scares some investors and traders a little. It is therefore not strange to see a short term consolidation at these levels. The ADX continue to place the market in strong uptrend with no indication of an immediate slow down.
The conclusion for the day seems to be this... the markets look extremely healthy to continue its rally form this point on should investors overcome the fear of the "unknown highs".
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