Stock Market Analysis

Tuesday, October 31, 2006

Daily US Market Comments 1 Nov 2006 by

As we expected yesterday, markets moved sideways indeed. Again, sentiments are largely mixed with lower October Consumer Confidence numbers which actually points to the fact that the Feds have been successful in their efforts to engineer a soft landing. This Friday's employment report should set the definitive pace for the market, until then, markets are likely to continue sideways.

No surprises yesterday as the markets moved sideways as expected. NASDAQ continue to dance around its 2350 resistance level with slight signs of it becoming a support level and the Dow's short term stochastics moved below the overbought region for the first time in slightly more than a month. There are still no definite signs that the bull run is over as all trendlines are still being respected, however, the rally has definitely lost its momentum as all momentum indicators start to tee off for the first time in 3 months. Markets should continue sideways for at least these few days before it must once again take the big decision... to continue up with the energy that it has accumulated so far in this little consolidation or to yield into a short term technical correction.

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Monday, October 30, 2006

Daily US Market Comments 31 Oct 2006 by

Markets closed mixed yesterday as traders continue to make sense of all the mixed elements in the environment. With oil prices coming to a halt, GDP falling but inflation under control, there are plenty of reasons for some traders to start feeling slightly pessimistic and for some others to remain optimistic. Until we see some change in the environment, the markets could continue sideways for a short while.

Markets continued sideways yesterday with NASDAQ making a slight comeback. Noteworthy today is the Dow. The Dow have been rising on a very strong rising trendline until it broke that trendline to downside yesterday, taking its first journey off the overbought scales in a month. As for NASDAQ, it sure does look like the break from the 2350 resistance level 2 days ago is but a fluke as it continues to trade around that level. Until we see some significant change, markets should continue to move sideways from here.

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Sunday, October 29, 2006

Daily US Market Comments 30 Oct 2006 by

Markets closed last Friday in the greatest one day drop for the month of October. US GDP rose at the slowest pace in 3 years by only 1.6%. This is not a surprising event as the drop in GDP hs been forewarned by Big Ben during the recent Fed release. However, that did not stop the market from reacting negatively to it. Oil continued to move sideways along its support level with no real sign of staging a come back yet. Overall, despite lower GDP, US economy continue to look promising with inflation coming to a soft landing.

Markets continue to move sideways last Friday despite the huge drop. It sure looks like the market is at last willing to yield to a short term consolidation after spending much of its time in its grossly overbought condition. Like I have mentioned early in the month, the market has been extremely bullish and such bullishness can give way anytime and that we have to stare hard at the first signs of such happening. Last Friday's drop sure look like the first signs that the market is coming to a halt, at least a short term one, and if followed up today, could officially spell the end of one good run. NASDAQ is looking weaker while the Dow still looks mighty strong, if strength persists today and their trend line is being respected, as it still is right now, the markets could continue on for a short while more. All that needs to be decided by how the market performs today.

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Thursday, October 26, 2006

Daily US Market Comments 27 Oct 2006 by

Markets continue its journey upwards yesterday with the most gains posted by NASDAQ. Oil prices also took a small ditch yesterday. That, along with the favorable Fed release the day before, continue to set a bullish environment for the markets.

NASDAQ made an exciting move yesterday, breaking away from its 2350 resistance level strongly. As we have predicted before, this is exactly what NASDAQ needs to go into another round of rally, hopefully duplicating the one we saw back in 2003. NASDAQ has spent enough time at the bottom of the valley since 2002. The Dow has since gotten out of the 2000 - 2002 valley with the 2003 rally but not NASDAQ. There is still a long way up for NASDAQ before it can climb out of the valley but if the economy remains stable under sound monetary and fiscal policy, things does look good. For now, NASDAQ ended in a nice shaven head candle showing great potential to continue up today. Short term stochastics have also yet to reach an extreme overbought position supporting our upside speculation.

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Wednesday, October 25, 2006

Daily US Market Comments 26 Oct 2006 by

First of all, I must apologise for getting the date for the Fed release wrong... it was not to be on Friday but yesterday. Well, all's well went well as the Fed continued to hold interest rate rises this time round, spurring a small gain in the markets yesterday. There was a little reservation in the statement this time round pointing to signs that inflation is coming back again and if that is so, the Fed may have to raise interest rates again during the next meeting. For now, the markets have reacted favorably to the news even though it is much expected. The energy sector also recieved a great boost as oil prices staged the biggest single day rise ever. This is due mainly to the effects of the oil production cut showing up at last as an unexpected drop in crude inventories. This, along with signs that inflation is coming back again, may put some short term pressure on the markets. For now, even though oil staged a little rebound and inflation look like it is coming back, things are still not looking bad enough to turn the market around as sentiments remain largely bullish.

Markets continue to rise as expected onlong their respective trendlines yesterday.
No big surprise so as to say. Oil prices are back up and even though it was an amazing one day gain, it is still not strong enough to say it is ready to stage a reversal as it is still lingering around its $60 support level. However, if oil continue to climb today, it may complete a reversal pattern which may give it the energy to turn into an uptrend from here on. With this market rally tied very closely to the decline in oil prices, it may really come under very strong pressure should oil prices truly stage a reversal.

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Tuesday, October 24, 2006

Daily US Market Comments 25 Oct 2006 by

Markets closed mixed yesterday in advanced of this Friday's Fed release. The Dow closed in a stalemate of 15 advancers and 15 decliners, further expressing the cold calm wait for the coming Fed release. Even though all traders know that in all possibilities, interest rates should stay stagnant along with the dropping CPI, it is almost a habit for the markets to behave this way before every release.

Markets traded and closed sideways ahead of the coming Fed meeting. While Oil prices rose yesterday, it has yet to recover much lost ground. The Dow remains grossly overbought and these few days of lobotomy may be exactly what it needs to shed off some of these overbought condition and to continue its journey to the moon. NASDAQ traded sideways in a neutral inside day. Lingering just outside of being overbought, NASDAQ looks poised to move further up at a moment's notice.

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Monday, October 23, 2006

Daily US Market Comments 24 Oct 2006 by

Markets continued to move upwards as we have expected yesterday. Market participation is also increasing as this rally continues. The "short breather" we mentioned yesterday is very short indeed. The market was primarily spurred by the surprising drop in oil prices and the increasing optimism for this earnings season as many giants like Google did phenomenally well. This is yet another record high for the Dow and NASDAQ recovered an entire week's loss. With oil prices losing ground once again despite efforts by OPEC, it is not surprising to hear see more follow up action from OPEC soon. Imagine taking a 30% paycut in just a few short months... certainly not something you would live with when you can do something about it, right?

Markets powered ahead on strong volume as expected. NASDAQ has managed to break above its 2350 resistance level yesterday and with a good follow up today, it might fulfill the prophecy we made yesterday. :) Truly an exciting time for the markets as the trendlines continue to look strong and indestructible. Will this lead on to the kind of rally we experienced in year 2003? These few days will be critical in determining that. Starting from today, if we see a strong, clean upside followup in NASDAQ away from the 2350 level, we might be seeing NASDAQ make a new 5 years high and power on further for a significant while.

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Sunday, October 22, 2006

Daily US Market Comments 23 Oct 2006 by

Markets are becoming tired after such a long run and closed mixed last Friday. Oil prices has yet to show any signs of putting up a reversal after so much effort from OPEC. It has, however, found a support level and have been trading sideways along it since early this month. Inflation continue to be under control and until the oil production cut show some real numbers in terms of a decreasing national oil reserve, the markets still look healthy to continue upwards after a short breather.

Markets continue to move sideways last Friday. This has placed NASDAQ clearly off its overbought level but the Dow still look like it need to conserve another couple of day's energy before it can tee off from its short term overbought condition. Even though NASDAQ is up against a strong 2350 resistance level, last Friday's movement show it climbing slightly along its trendline. This respect of the trend line may not be a very significant move but it certainly say alot about its strength and integrity. If the trendline holds, we may see NASDAQ break its 2350 resistance level within these few days. Such a move may lead to a revival of the kind of rally we saw in year 2003.

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Thursday, October 19, 2006

Daily US Market Comments 20 Oct 2006 by

OPEC decided to up the ante when the 1 million barrel a day cut failed to produce any significant rebound in oil prices by an actual 1.2 million barrel a day cut. This move spurred oil prices up yesterday giving a boost to the energy sector and hence the overall market. As I have mentioned before, a 30% revenue lost to OPEC in just a few months is something they cannot accept lightly and will likely take progressively harsher measures to make sure oil prices rebound. This will certainly have an effect on the US economy as production prices will increase with higher energy prices. For now, inflation is under control, consumer prices are falling at last and all looks rosy for the market. Keep your eyes open for the thorns though.

Oil prices have formed a significant support level at the $59 - $60 level. Will it rebound from this level or continue to trade sideways? Frankly, there is no way to tell technically except that it is gradually shedding off its oversold condition. NASDAQ has retreated marginally from its overbought condition and if its trendline holds, it could continue upwards from this level. NASDAQ has been trading sideways since 2004 and this is the first time in 2 years that it looks so promising to break its sideways trend and to hopefully go back into the kind of uptrend which we witnessed from 2002 to 2004. In order to do that, it needs to overcome its 2350 resistance level strongly. Let's wait and see. For now, the markets remain in uptrend.

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Wednesday, October 18, 2006

Daily US Market Comments 19 Oct 2006 by

The markets have been pretty strange lately in that it usually respond very strongly to good news early in the trading session and then end up mixed or down. Markets opened strongly yesterday on favorable CPI numbers indicating that inflation is under control. By the end of the day, markets were mixed with the Dow up slightly but NASDAQ down 0.33%. By recent observation, the real effect of any news on the markets lately, only surfaces about 2 to 3 days after. With inflation under control and oil prices continue to trade lower, the markets have all the fundamental reasons it needs to go further up.

The Dow continues to trade higher yesterday slightly to our surprise. This made its trendline grow ever steeper and steeper. We expected the markets to correct a little before continuing higher on the same trendlines that brought them up so far. NASDAQ and the S&P500 seems to be follow that game plan well. Steep rising trendlines like what we see in the Dow will no doubt collaspe one day into a severe correction and we should be on the vigilance should indications of such a movement becomes imminent.

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Tuesday, October 17, 2006

Daily US Market Comments 18 Oct 2006 by

OPEC has officially decided to cut oil product by 1 million barrel a day at last... strange but that seemed to do little or anything at all to stop oil prices from falling further. Oil prices continue to trade downwards away from the gains of the day before. However, this along with a PPI reading that suggest that inflation is picking up again, put some pressure on the market to end down. NASDAQ was hit the hardest yesterday on a 3.29% sell off on INTC. Today's CPI number would certainly determine if this market can go further up. If CPI numbers suggest inflations are under control, the Feds may continue to hold their gun spurring the markets higher.

NASDAQ suffered the most severe correction in a day since 2 Oct yesterday dropping 1.06% in a single day. It is however, hardly surprising for both the Dow and NASDAQ to trade sideways a little or even drop off a little from this level as both indices are facing strong resistance levels. NASDAQ is up against the strong 2350 resistance that we spoke of many days ago and the Dow is of course, struggling to make historical highs every day. NASDAQ has formed some kind of an evening star formation on high volume. If followed up upon downwards today, could spell a significant correction. For now, until more data becomes available from the market movement today, markets continue to be in an uptrend on a very strong trendline.

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Monday, October 16, 2006

Daily US Market Comments 17 October 2006 by

Oil prices rebounded yesterday taking the bulk of the energy companies up along with it. This gave an overall boost to the market the way we saw the markets behave the last time oil rebounded late last month. Even though oil prices have rebounded slightly, it is still at a very low level and does not send a wave of panic across the markets. This have instead given some much needed boost to the already beat energy sector. We will have to see if further actions from OPEC does indeed enable oil prices to stage a rally from this point onwards... if it does, the markets could be in for a little correction.

Oil prices seemed to have found a short term support around the $60 region. This rebound yesterday have managed to bring it out of its short term oversold condition which could help oil prices go further down. Looking at the formation, however, we see oil prices forming a little W bottom which could spell more upside to come should oil prices continue to climb today. This formation is considerbly stronger than when oil prices staged a rebound late last month. This is a critical juncture for oil prices... the movement of these few days could decide where oil prices might move towards at least in the short term. It just take one more day of rise to put oil prices in line for a W bottom rebound and one day of fall today to put it back down into its declining channel.

Oil prices and the coming Q3 earnings season could significantly affect the coming market direction.

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Sunday, October 15, 2006

Daily US Market Comments 16 Oct 2006 by

Continued correction in oil prices despite what has been done by OPEC so far spurred the markets on. Seeing the ineffectiveness of its actions so far, OPEC, which is responsible for 40% of the world's oil export, will be meeting to officially discuss a 1 million barrel per day cut in production in order to stablise oil prices. I would think the oil cartel will continue to pursue actions with increasing intensity to stop oil prices from falling at all cost. By the time oil prices turns around, the markets would also be in such an overbought condition that it will not be strange to see a correction.

All technical indicators scream a strong bullish battle cry. Market momentum is strong and trading atop a strong rising trendline. The only indication that the rally may slow down a little very soon is the consistently falling volume and the extreme overbought condition. Overall, it is going to take a lot more than that to turn this trend around.

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Thursday, October 12, 2006

Daily US Market Comments 13 Oct 2006 by

The Markets broke strongly to upside yesterday pushing the Dow into yet another new historical high! Indeed we are witnessing history in the making now. With the oil pressure now off and the small plane tragic confirmed as not a terrorist act, the markets are free once again to regain its chosen path.

The rally came in just a little earlier than we have expected... not that we are complaining of course. :) We expected the consolidation to go on for another couple of days before the rally continues but looking at the patterns yesterday, the markets are right in line for a rally forming a perfect rising stairs formation. Yesterday's rise have put NASDAQ right at the doorstep of a strong resistance level at 2350, along with the Dow at new historical highs again, I would expect the market to once again go sideways a little for a few days at least from today onwards before it can go further. It must also take this opportunity to shake off some of its overbought condition.

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Wednesday, October 11, 2006

Daily US Market Comments 12 Oct 2006 by

A mini rendition of the 911 tragedy struck New York City again as an unfortunate small airplane rammed into a condominium building causing 2 deaths. It is an unfortunate incident that put some early pressure on the markets, causing concern if this is another terrorist attack. However, it became clear later in the day that it is anything but a terrorist attack. Markets recovered slowly to close right about where it closed the day before.

No big surprise on the technical side as the market continue to trade sideways as we have predicted it to. Markets continue to stay in the extreme overbought position and we should see it come down just a little bit before it has any energy to go any further up. NASDAQ has bounced off and rallied from its 200MA so far and will be coming up against another strong resistance level at 2350 soon.

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Tuesday, October 10, 2006

Daily US Market Comments 11 Oct 2006 by

The Nuke test in N Korea didn't look like it will have any effect on the markets afterall. It seems like everyone in the world knows what Mr Kim is up to all these while anyways. The real surprise of the day is Saudi Arabia's decision not to cut production as OPEC has decided to and have fuelled a continued ditch in oil prices. Markets were not responding very much to this move in oil prices but any further drop would certainly fuel the market to go further.

Markets continue to consolidate sideways as expected. Trendlines continue to be healthy but with the market in such extreme overbought condition, it seems almost impossible for it to go any further without at least a slight drop.

Monday, October 09, 2006

Daily US Market Comments 10 Oct 2006 by

What started out as a scary, uncertain day ended up pretty nicely yesterday. With the North Korean nuclear success, the Oil production cut by OPEC and a lower opening, the markets looked initially to be in some form of trouble in the early hours. However, optimism started building up slowly after a while with the realisation that these events do not necessarily affect the US in a big way. NASDAQ was also given a boost with a 2% rise in Google as the giant gets bigger after buying for over $1.6Billion.

Markets continued to rise and once again entered an extreme short term overbought condition. Volume was light yesterday probably due to the bank holidays and with such a lack of participation behind such a weak rise, it is not strange to see the market consolidate a little for a few days before continuing its climb.

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Sunday, October 08, 2006

Daily US Market Comments 09 Oct 2006 by

Well, after a few great months in the markets, OPEC has at last made a direct response to the sliding oil prices with 6 members agreeing to cut oil production by 1 million barrel per day. This move should at least be able to stop oil prices from falling at further or better still, in OPEC's view of course, raise oil prices. But the golden question remains; How will this affect the stock markets? Will it bring a stop to the rally so far?

Markets have done extremely well for the past 3 months in a rally that almost completely shadows the inverse of the oil prices. The impact that the cut in production has on the markets will definitely overshadow any technical forecast.

Friday, October 06, 2006

Daily US Market Comments 06 Oct 2006 by

Markets slowed its advance yesterday amidst talks by Fed officials that further rate hikes may be necessary and the rebound in oil price. Interestingly, none of these news have caused the market to move down at all. Even though it was a slightly weaker advance, it is an advance nonetheless and not a surprisingly small one especially after such a huge advance the day before. Today's Job report will definitely have an impact on the market. Let's watch what happens.

Markets continued its expected advance yesterday. It is hardly surprising to see such a small advance yesterday as a huge advance as the day before tends to lead on to a few weaker days. Trendlines stay intact as markets take the slow track back into the overbought region.

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Wednesday, October 04, 2006

Daily US Market Comments 05 Oct 2006 by

Markets surged unexpectedly yesterday on an equally unexpectedly optimistic comment by Uncle Ben. From his comments it seems like the Fed is extremely happy with the way the economy is progressing and increased the probability that the fed may continue to keep rates stagnant. This is exactly the kind of good news the market needs to continue its slowing rally. This, along with favorable Job numbers this Friday, may be all the fuel the market needs to go much further.

Yesterday was a day where markets suddenly move from a sideways trend into an uptrend suddenly and unexpectedly. This move has put the market back on its rising trend line on very strong volume. Markets are also off its overbought condition and does look very good to continue its uptrend.

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Tuesday, October 03, 2006

Daily US Market Comments 04 Oct 2006 by

Oil prices took a surprising dip yesterday to new lows below $59.00! That dip was the "energy" that gave the "enthusiasm" that we were talking about yesterday, pushing the Dow to close yet another historical high. With the Mexican oil rigs safe from hurricane, speculations are that US oil reserves will once again be more than estimated. Oil will certainly continue to be a major mover of the market until the Job figures this Friday.

What a day for oil prices! What looked like a pretty strong support level at about $60 collasped yesterday as oil prices break below $59! This break to downside have placed oil prices back on the downtrend slide. With much of its oversold condition worn off at the $60 support level, there certainly is much more potential for it to move further down. With this, the Dow continues to close higher along its rising trendline and NASDAQ took a little peep to upside. NASDAQ looks slightly weaker than the Dow as it failed to move to upside with the magnitude that we saw in the Dow. NASDAQ has managed to wear off much of its overbought condition and certainly in line to continue its uptrend should it at least close above the high of 2 days ago. Failing which, we could see NASDAQ continue its consolidation for a few days more. One consolation for those of us worried about the weakness in NASDAQ is the strong support that is being witnessed at the 200MA at about the 2221 level. It is not likely to break below that level unless a really really good reason emerges.

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Daily US Market Comments 03 Oct 2006 by

The dip in oil prices yesterday did very little to stop the markets from entering into a consolidation. Markets are at a point where a lot of energy and optimism is needed to fuel its advance. Sadly, that is exactly what we are lacking these few days. The only thing that may well serve to fuel this rally would be this Friday's job numbers. Lets continue to wait and see.

Oil prices look like it dipped but is in actual fact still in a sideways trend bouncing up and down its support level of about $60. With the oil sideways, the markets extremely overbought and a lack of any fundamental push, it is not surprising to see the markets going into a short term consolidation like it did yesterday. Even though the markets are in a consolidation, its healthy trend line stays intact and strong. Unless we see a definite break out of its trend line to downside, I would say that the consolidation is short term and the rally is still intact.

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Sunday, October 01, 2006

Daily US Market Comments 02 Oct 2006 by

With the markets slowly down its advance, everyone's looking for more reason for the rally to continue. That reason may well be contained in this Friday's job reports. How well will the markets hold up prior to that?

Oil prices continue to climb last Friday as it rebounded from its support level. This, along with the markets being in extreme overbought condition, is putting some short term pressure on the markets. The Dow continue to retreat from its all time highs while NASDAQ seem to have hit some form of ceiling. This consolidation may last a few days more as the markets attempt to wear off some of its overbought condition. This is quite a dangerous level for the dow as it forms an evening star formation at such high levels. The last time we saw that in 11 May 2006, led to one of the deepest correction since early 2005.

Lets keep all fingers crossed.

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