Daily US Market Comments 20 Oct 2006 by MastersoEquity.com
FUNDAMENTALS
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.
TECHNICALS
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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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.
TECHNICALS
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.
Want To Shadow My Every Trade To Make Over 87% Monthly?
posted by Jason Ng at 7:46 PM
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