Stock Market Analysis

Thursday, November 30, 2006

Daily US Market Comments 01 Dec 2006 by

A slew of unfavorable economic data and rising oil prices left the market relatively unchanged yesterday. Core-PCE deflator was higher than expected, Chicago PMI fell to the lowest in 3 years and a slight rise in inflation index to 2.4% all add up to additional pressure on a bull run that is currently under siege by a returning oil price. Oil closed uncomfortably near $63 yesterday suggesting that a full scale rebound has started until we see otherwise. Looks like all that OPEC measures are beginnin to see some effect after one long month. We will have to observe and watch what the market does next as a market under such conditions can go anywhere indeed.

Markets moved sideways yesterday without any surprise. Looking at the major indices, we can see that every short 3 to 5 days move up are littered with dojis and neutral days in between like the one we saw yesterday, that is why it comes with no surprise. The only concern we see here is that oil has made a definite break to upside from its neutral channel and has followed up on that break all the way yesterday. Our trend indicator on oil has also seen the first shift to bullish in almost 5 months. The current market bull run has been in symmetry with the drop in oil price since August... will the turnaround in oil price signal the end of a nice bull run? There are no indications yet but we should all keep a close lookout. I would think that the end of the market bull run will be signaled with a huge single day drop like we saw on 17 Nov, along with a surge in oil price, and then followed up the next day with a large drop second to the one on 17 Nov, breaking the uptrend trendline to downside.

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Wednesday, November 29, 2006

Daily US Market Comments 30 Nov 2006 by

Markets continue to recover from the drop of 2 days ago with a higher than expected GDP growth of 2.2%. Market gains were assisted with gains in the energy as oil price break above $62 for the first time in many months. This is a critical time for the markets if oil prices start a rally from this level, the market may be put under significant pressure.

All indices rebounded off their respective trendlines nicely indicating that the rally is still very much intact. Oil broke to upside from its $59 - $61 neutral channel yesterday and is the follow up that we feared might happen yesterday. If oil price do not fall back down into its neutral channel today, it may start a rally from this point on. At this moment of time, there are still no obvious signs of weakness in the markets.

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Tuesday, November 28, 2006

Daily US Market Comments 29 Nov 2006 by

Markets moved up very marginally yesterday as some bargain hunting begin to come in. Other than that, there are very little fundamentals to support any real optimism. Housing continues to pull the US economy down, US durable goods export fell the most in 6 years and oil prices continue to rise by the dollar to settle above $61. If the technicals do not hold up over the next few days, then it may be about time the market goes into a short term correction.

Markets settled sideways near where it ended the day before. However, a small open candle below a huge closed candle is always a good sign suggesting a possible rebound akin to what we saw on 2 Nov and 2 Oct. The certainty in this kind of formation is that if it drops today, we can be sure that a quick rebound may be a remote possibility. Therefore, today would be critical. A drop today will break the Dow's 30MA support to downside for the first time since August and may see a testing of the 50MA. Oil is one again trading at the top of its channel, reeling for a topside break. A break to topside can put a lot of pressure on the overall market.

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Monday, November 27, 2006

Daily US Market Comments 28 Nov 2006 by

Markets had the worst single day drop in 4 months yesterday as investors who has made money so far begin to liquidate their position in preparation of the Christmas season. Mutual funds also experienced a barrage of drawouts. That is why we see a huge volume supporting yesterday' drop even though there was no significant news nor were there the same impact in the treasury and oil market. December has been a soft month for most of the years and it is not surprising for an overbought market like this one to go into a December correction.

Markets literally jumped of the cliff yesterday on extremely strong volume. Interesting to note here is that it has helped all major indices to get off their short term overbought condition in a single day and yet did not compromise the 30 Days moving average support level that has been pushing the markets higher and higher all these while. In fact, it looks like it has completed a multi-days staircase formation in a single day and may lead the markets higher, sooner. Today will be a critial day for the markets. If the markets rebound from this level, respecting their respective trendlines, then we will see the market higher. If markets fail again today and break their trendlines to downside, we may be witnessing the beginning of a short term correction, at last.

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Sunday, November 26, 2006

Daily US Market Comments 27 Nov 2006 by

Markets were down slightly last Friday with a slight rebound in oil price. Retail sales are starting to pick up for the holiday season and that might help give a boost to the retail sector and hopefully the overall market.

Markets continue its sideways consolidation last Friday. Even though the Dow was down quite a bit, it's trendline remains intact as it plays out its staircase pattern. Oil rebounded slightly but is still within the context of a sideways pattern too. No surprises as all indices continue to look good to upside.

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Thursday, November 23, 2006

Daily US Market Comments 24 Nov 2006 by

Welcome back from the holiday. Markets were up before the holiday with NASDAQ posting the greatest gain. Surprisingly, the favorable oil inventory numbers didn't manage to push oil prices down very significantly as it continues to trade above $59 right now.

NASDAQ has made a topside break from its short consolidation while the Dow continues to go sideways. Oil also continued sideways despite the favor oil inventory numbers. We are unlikely to see much changes today either from the short market day today.

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Wednesday, November 22, 2006



(Remember, Market is half day tomorrow.)

Tuesday, November 21, 2006

Daily US Market Comments 22 Nov 2006 by

Markets were put under pressure as oil prices staged an unexpected turn around closing above $60 once again. Even though markets are up marginally, it is evident that it is under severe pressure and has come almost to a complete standstill. The slow down could also be due to the coming Thanksgiving. Traditionally, markets will come almost to a standstill a couple of days before any major holidays. With oil prices display a hint of bullishness and the fact that it is still traded elsewhere in the world despite the coming holidays, will we come back from the holidays to a nasty surprise?

No surprise yesterday as markets continue its staircase consolidation. The only concern seems to be that oil has managed to get back up on the higher end of its neutral channel again. A break upwards from this level could spell a bull run for oil price and of course, probably the end of a good run for the markets. For now, oil prices doesn't seem to have affected the technical pattern of the major indices.

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Monday, November 20, 2006

Daily US Market Comments 21 Nov 2006 by

Markets closed mixed as investor's concern that the market may be overbougt rose. Oil prices also managed to get back up into its $59 - $61 sideways range showing that strength prevails afterall. That could make investors a little concern about whether oil could stage a rebound from this point on.

No real surprise yesterday as all indices continue its sideways consolidation. Looking back at the indices over the past 3 months, we see that it is climbing on steadily on a staircase like formation of 3 to 5 days consolidation before every significant move up. From the way it looks, the markets might just build another step up just before thanks giving for a good holiday bonus. :)

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Sunday, November 19, 2006

Daily US Market Comments 20 Nov 2006 by

Markets closed mixed as oil prices staged a slight come back last Friday. Oil managed to get back up into a high of it's $59 range again last Friday. This showed that oil price remained resilient and that many investors and speculators continue to accumulate at these levels on a possible rally due to continued actions from OPEC. We should not see another series of action from OPEC so quickly as they will want to watch and see if their previous action attains their desired results.

Markets continue to consolidate as it closed sideways last Friday. Looking at the candlesticks, however, tells us that the market remains extremely bullish even though it closed mixed. The candlesticks over the past 3 days have closed with open candles, revealing the fact that market forces remain strong in taking the closing levels higher than the opening levels. Looks like this consolidation may be shorter than the previous ones.

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Thursday, November 16, 2006

Daily US Market Comments 17 Nov 2006 by

Markets continue its rally yesterday as CPI grew at record slow pace and oil prices taking a surprising plunge to settle around $56. All economic indicators so far points towards a strong fact, and that is, inflation is successfully under control with no notable side effects. This will further eliminate the need for the fed to increase interest rates at the coming fed meeting... the only question remains, when will it be justifiable for the feds to start CUTTING rates?

Markets continue growing at a very steady pace pushing into record highs. Energy companies took a hard hit yesterday as oil price plunge below its neutral $57 - $61 channel. USO saw this plunge taken on the strongest one day volume ever witnessed. A channel break on strong volume can only mean one thing... a high probability turn to a down trend. This could give the market more fuel to move higher as it enters yet another short term oversold position. I also noticed that both the Dow and the Nasdaq Composite is closing nearer to its opening level over the past 2 days. This could mean that some level of profit taking is occurring and that this part of the rally might running out of energy. It won't be surprising to see both indices go into their signature staircase behavior at this point before moving higher.

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Wednesday, November 15, 2006

Daily US Market Comments 16 Nov 2006 by

Market continued its rally yesterday as the lower than expected crude inventory gave oil prices a slight boost and consequently, a boost in the energy sector. It has been observed lately that the first day of rise in oil price usually gives the energy sector a boost but will yet affect the rest of the sectors. This usually give rise to a gain to the overall market. However, we all know what happens if oil prices should stage a prolonged rally again, don't we?

Markets continue to climb to new highs yesterday. This has taken the Dow back into a short term overbought position or the first time this month. Even though it is slightly overbought, the degree of which is still far behind the levels we saw back in October. This could suggest that there is still more potential to topside before it do another of its staircase formation. Oil continue to trade sideways around its $59 - $60 support level with no clear indication of whether it will go up or down. Oil has been in a strong neutral trend since early October despite all the efforts put in by OPEC to turn things around for themselves. Overall, markets still point to upside until we see some changes in the future.

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Tuesday, November 14, 2006

Daily US Market Comments 15 Nov 2006 by

Markets continue it's journey to upside yesterday as low October PPI number suggested that wholesale inflation plunged by a record amount due to low energy prices. This number is testimony to the effectiveness of the past interest rate hikes and may suggest that further interest rate hikes remain unnecessary. This, along with a small drop in oil price, is all the fuel the market needed to continue its rally. Oil has been on the wall for a while now and we are hoping today's oil inventory number will cast a definite tone onto it.

An exciting day yesterday as markets break to upside. The Dow ended its short consolidation and continued its staircase like advance making yet another historical high. NASDAQ also made an important followup to the gains of 2 days ago. This has allowed NASDAQ to edge ever nearer to a 6 years high and with momentum gaining to upside on steadily rising volume, we could see more gains over the next few days.

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Monday, November 13, 2006

Daily US Market Comments 14 Nov 2006 by

Markets moved higher on a drop in oil prices yesterday. Oil prices collasped once again back down into its $58 - $60 range yesterday. This continued weakness in oil prices will definitely put OPEC on the edge of their chairs once again and if oil prices continue to move lower from this point onwards, especially if it breaks below $57 once again, we could see OPEC coming together to brew up some "solutions" again.

The Dow continued its sideways consolidation yesterday while the NASDAQ Composite Index continued higher almost making a new 6 years high as it broke above the 2400 level. This is a very critical level for NASDAQ to break if it should have any hope of staging a rally such as we saw back in 2003. Oil prices fell back down into its neutral channel yesterday eliminating any hopes of a quick rally.

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Sunday, November 12, 2006

Daily US Market Comments 13 Nov 2006 by

Markets closed mixed last Friday with slight inclination to upside. This is hardly surprising given the new highs made last week. With no new data to rock the market, the only thing left to look at is this quarter's earnings release. With the earnings coming in very positively so far and no big moves upwards in oil prices, markets remain optimistic.

Markets closed sideways last Friday in what looks like another short term consolidation. The Markets have been rising and consolidating and then rising in steps so far. With the rising trendlines still strongly intact, the current trend looks set to continue until we see some changes in future.

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Thursday, November 09, 2006

Daily US Market Comments 10 Nov 2006 by

Markets took a slight setback after 3 straight days of gains on a surprise oil price rally to above $61 in one day. OPEC's measures seem to be taking effect right now and if oil prices continue to rally, it could put some pressure on the markets and perhaps even end the rally so far. Energy prices affects everything... higher energy prices means higher corporate cost and that translates to higher consumer prices and therefore inflation. Inflation can then lead on to higher interest rates. Oil prices should therefore be the focus to watch for the next few trading days.

Markets took a slight ditch yesterday and is hardy surprising given the strong gains over the past 3 days. NASDAQ continue to make higher high and high low even though it closed below the close of 2 days ago. The Dow lasped into another sideways movement with yesterday's move. Overall, all indicators continue to point to more upside to come with trend lines being held and with short term stochastics still much lower than it was at during the whole of October. Of concern is the change in oil prices. Oil prices took a change in trend yesterday from a slow downtrend to a neutral trend. Such a move to upside from a strong support level of $59 - $60 could spell more upside to come if followed up today.

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Wednesday, November 08, 2006

Daily US Market Comments 09 Nov 2006 by

Markets continued its rally yesterday as the energy sector blast ahead with a slight rise in oil prices. The Dow closed yet another all time high and NASDAQ closed a 5 years high at last. The balance of power in the senate remain largely intact, giving some assurance to investors.

Markets made a surprising and yet important gain yesterday. Even though gains were small, it has allowed the Dow to close yet another new historical high and NASDAQ into a 5 years high at last. This break to upside is an important one that confirms that the bull trendline is still intact. This, along with the fact that short term stochastics are still not seriously overbought, could lead to more upside to come.

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Tuesday, November 07, 2006

Daily US Market Comments 08 Nov 2006 by

Markets closed up yesterday in a surprising early rally. Even though markets closed much lower than its intraday high, it is still a move that completely surprised us. Investors are obviously optimistic that this election will result in a legislation that is unable to make any major changes to the business environment and that oil prices are not looking like its gaining any upside strength. All these are, of course, only speculations. How the election turned out and how the resulting legislation will perform is something nobody can accurately predict and oil prices are still up for a major oil inventory numbers release today.

Markets followed up to upside yesterday making new intraday highs. The Indices however retreated strongly from those highs by the end of the trading day to rest within the confines of a sideways trend. The move was backed up with increasing volume and is the kind of followup which we mentioned that will carry the market further yesterday. All indicators point towards a new run coming and until something happens to prove otherwise, this may be where investors who have missed the rally so far might wish to give it another shot. This rally is slowly building up to what is looking like a year end rally. An interesting observation turns out that over the past 5 years, 4 out of 5 year end rallies run up till the end of November and then fails from December onwards... will this year follow the same pattern?

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Monday, November 06, 2006

Daily US Market Comments 07 Nov 2006 by

A surprising day at the markets as stocks rallied broadly across the board. Just when we thought we should not see strong action until either the election results or the oil inventory numbers are out. The Dow rallied above its 12,000 point resistance level once again and NASDAQ move up above the critical 2350 level once again. This move is primarily due to optimistic speculation on the outcome of the elections as well as some big private equity buyouts. Oil prices are also back up above the $60 level ahead of oil inventory numbers. All in all, the underlying current of news, factors and sentiments are extremely mixed and the surf on the surface is not be taken as the general direction of flow.

Markets roared and thundered upwards powerfully yesterday bringing NASDAQ above the 2350 resistance level and the Dow back up above the 12,000 level. Surprisingly, even though the gain is tremendous, there didn't seem to be a lot of volume behind the move. This could mean that the gain is participated by only an elite, pace making, industrial player. Looking the overall trend, however, reveals that the markets are still moving sideways. The Dow has not made a new high nor has NASDAQ moved higher than the high on 26 Oct. On the optimistic side, we see that short term stochastics has begun to turn up from an almost oversold position and mid term trendlines established by the last bull run has upheld its integrity. If we see a followup today on good rising volume, we might be witnessing the beginning of a new bull run.

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Sunday, November 05, 2006

Daily US Market Comments 06 Nov 2006 by

Markets opened strongly last Friday on favorable employment numbers but yield to the short term correction that is now evident by the end of the day. After a fantastic bull run last for slightly more than 3 months, the Dow finally yielded to a short term correction as we have expected. This correction looks extremely healthy as there were no panic selling evident in the markets and could allow investors to take some profits off the table and perhaps help investors who missed the bull run to take some positions at this level. Markets are unlikely to stage anything surprising until the election results are clear. Investors are looking for a government that is business oriented and that could help the market stage a second run. Oil continues to trade sideways while waiting for this Wednesday's oil inventory numbers. It will be quite surprising if oil inventories can beat estimates this time after so much action by OPEC. However, if oil inventories do indeed turn up to be favorable this time round, that could take oil prices lower.

The Dow is now officially in a short term technical correction as it continues to make lower lows for 6 consecutive days. NASDAQ looks slightly more resilient as it continues to trade sideways with no clear indication of going into a short term correction. NASDAQ continues to look held strongly by its 30MA as it has been so far. The Dow has broken its trendline to downside but that has also helped it move down towards the short term oversold region for the first time since August. This will definitely give the Dow the potential to go up further should it find a support soon. Oil prices look like it is trading sideways, but in reality, it is actually following a lowering trendline. Overall, markets are consolidating after a good 3 months run and are now mustering more energy to move further ahead.

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Thursday, November 02, 2006

Daily US Market Comments 03 Nov 2006 by

Markets closed mixed ahead of today's Employment Figures. So far, all indications seemed to point towards an accelerating slow down in the economy and seemed to have put a slight pressure on the markets. On the other hand, such a slow down seemed to be a result of all the measures taken so far to curb inflation. Oil price is also slowly and secretly creeping downwards in the guise of a sideways movement as it once again visit the $57s. Let's keep an eye on the employment figures today.

Markets continue to consolidate sideways as we mentioned 2 days ago. No nasty surprise yesterday. This consolidation has brought the short term stochastics of all indexes back down to the lowest level in 2 months. With the short term stochastics dropping off so quickly while indices are still largely sideway seems to suggest price resilience and therefore more upside to come after short term stochastics hit oversold level. For now, markets remain sideways.

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Wednesday, November 01, 2006

Daily US Market Comments 2 Nov 2006 by

No surprise yesterday as the markets continue to consolidate as we have expected ahead of the employment numbers. Oil continue to linger in the $58 - $61 range with no big surprises. Let's continue to hold on and wait for the employment numbers.

Markets continued sideways as the consolidation continues. This breather has indeed allowed all indices to retreat significantly off their short term overbought levels. Of note yesterday is NASDAQ's move below the 2350 resistance level once again to trade tightly within a narrow 2330 - 2360 channel. So I think the top and bottom limits for NASDAQ is thus established... a break above that channel could mean a second bull run and a break below that channel could mean a short term correction. Let's continue to watch and see.

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