Oil Sinks & Lifts Markets!
FUNDAMENTALS
Oil prices closed below $55 for the first time since June 2005! At the time of this writing, it is trading at only $53.60! This gave lift to a market that is thirsty for some kind of optimism. Looking at the internals, however, showed that advancers still par decliners across the board with no clear leadership. AAPL was up more than 13% in 2 days due to the successful launch of its iPhone and that gave the Nasdaq composite a more significant rise against the Dow. AAPL will once again be the focus this season as CISCO sued Apple over the use of the brand "iPhone" as that is a trademark owned by CISCO. If CISCO wins this lawsuit, it could put some short term pressure on AAPL. I will be following this story closely. Overall, as long as oil price continues to move down, capital costs and cost of living will too and that will definitely help the stock markets.
TECHNICALS
Markets continued to move sideways with major indices closing higher. The Dow's gain was marginal at best and continued to reinforce its neutral trend. Nasdaq Composite however, broke the 2450 resistance level after half a day in the trenches. This is an extremely bullish move on high volume. Does this mean that Nasdaq is ready to end its neutral trend to go back into a bullish trend? Maybe, but not yet. We need to see a follow up today which hopefully 2470 to be sure. The markets has always surprised us with a complete, catastrophic reversal just when we are too sure. That is why we always look for clear follow up to a one or two day formation before coming to a conclusion. Looking back at 18 April 2006, we saw a single day 1.95% rise in the Nasdaq composite, however, after failing to break the 7 April high, it collasped into a catastrophic decline. That is what we want to be sure to avoid. In this neutral trend so far, we see strong support from the 30 and 50 days moving average from both the Dow and Nasdaq and that gave them a strong bullish undercurrent. A break below the 50 days moving average will sink them into a bear trend immediately, so that is a level all short term traders want to watch and that is a level index players probably want to set stop loss at.
Oil prices closed below $55 for the first time since June 2005! At the time of this writing, it is trading at only $53.60! This gave lift to a market that is thirsty for some kind of optimism. Looking at the internals, however, showed that advancers still par decliners across the board with no clear leadership. AAPL was up more than 13% in 2 days due to the successful launch of its iPhone and that gave the Nasdaq composite a more significant rise against the Dow. AAPL will once again be the focus this season as CISCO sued Apple over the use of the brand "iPhone" as that is a trademark owned by CISCO. If CISCO wins this lawsuit, it could put some short term pressure on AAPL. I will be following this story closely. Overall, as long as oil price continues to move down, capital costs and cost of living will too and that will definitely help the stock markets.
TECHNICALS
Markets continued to move sideways with major indices closing higher. The Dow's gain was marginal at best and continued to reinforce its neutral trend. Nasdaq Composite however, broke the 2450 resistance level after half a day in the trenches. This is an extremely bullish move on high volume. Does this mean that Nasdaq is ready to end its neutral trend to go back into a bullish trend? Maybe, but not yet. We need to see a follow up today which hopefully 2470 to be sure. The markets has always surprised us with a complete, catastrophic reversal just when we are too sure. That is why we always look for clear follow up to a one or two day formation before coming to a conclusion. Looking back at 18 April 2006, we saw a single day 1.95% rise in the Nasdaq composite, however, after failing to break the 7 April high, it collasped into a catastrophic decline. That is what we want to be sure to avoid. In this neutral trend so far, we see strong support from the 30 and 50 days moving average from both the Dow and Nasdaq and that gave them a strong bullish undercurrent. A break below the 50 days moving average will sink them into a bear trend immediately, so that is a level all short term traders want to watch and that is a level index players probably want to set stop loss at.
Labels: fundamental analysis, investment, share market, stock market, stocks, technical analysis
posted by Jason Ng at 6:42 PM
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