Stocks Rallied On Optimistic Fed Statement... As Expected.
FUNDAMENTAL ANALYSIS
Interest Rates remained unchanged (as expected) yesterday as the Feds paused rates for a fifth straight time. Even though this has been largely expected, markets still rallied right from the moment the Feds released their extremely optimistic statement underlying a "moderate growth" in the economy and the success of a "soft landing". It is probably this optimism that resulted in the surge yesterday. Investors live in fear of rate hikes and such a statement clearly eases such fears. Oil continued to climb yesterday as it posted a largest 2 days combined gain in 6 months. Clearly the bullishness has returned in oil price as oil lingered around the $58 level. So far, an optimistic Fed statement has been all it takes to ensure that the markets resume its bullishness... only one question remains, what will happen after the ecstasy is over and oil prices continue to climb to new highs?
TECHNICALS ANALYSIS
Even though yesterday's market actions were surprising to many market analysts, it is hardly surprising for technical analysts. In fact, everything that happened yesterday were largely expected and explained in my post yesterday. The Dow surged 0.79% to form yet another step in its staircase formation as expected and the Nasdaq composite rebounded off its 50 days moving average support level on a "Black & White Brothers" candlestick formation... again, largely as expected. Even though not much of a surprise in the Dow front, the Nasdaq composite still needs a good follow up today and get above the 2570 level to seal in a change in sentiments. For 3 days have the Nasdaq composite failed to break the 2570 level and breaking that level would certain boost the confidence of technical analysts everywhere. Overall, all technical indicators are showing a rising in upside momentum and a reversal from a short term oversold condition. Along with the rebound from critical support levels and a healthy chart pattern, I would say the bulls are back... at least for now, until we meet the next matador. :)
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Interest Rates remained unchanged (as expected) yesterday as the Feds paused rates for a fifth straight time. Even though this has been largely expected, markets still rallied right from the moment the Feds released their extremely optimistic statement underlying a "moderate growth" in the economy and the success of a "soft landing". It is probably this optimism that resulted in the surge yesterday. Investors live in fear of rate hikes and such a statement clearly eases such fears. Oil continued to climb yesterday as it posted a largest 2 days combined gain in 6 months. Clearly the bullishness has returned in oil price as oil lingered around the $58 level. So far, an optimistic Fed statement has been all it takes to ensure that the markets resume its bullishness... only one question remains, what will happen after the ecstasy is over and oil prices continue to climb to new highs?
TECHNICALS ANALYSIS
Even though yesterday's market actions were surprising to many market analysts, it is hardly surprising for technical analysts. In fact, everything that happened yesterday were largely expected and explained in my post yesterday. The Dow surged 0.79% to form yet another step in its staircase formation as expected and the Nasdaq composite rebounded off its 50 days moving average support level on a "Black & White Brothers" candlestick formation... again, largely as expected. Even though not much of a surprise in the Dow front, the Nasdaq composite still needs a good follow up today and get above the 2570 level to seal in a change in sentiments. For 3 days have the Nasdaq composite failed to break the 2570 level and breaking that level would certain boost the confidence of technical analysts everywhere. Overall, all technical indicators are showing a rising in upside momentum and a reversal from a short term oversold condition. Along with the rebound from critical support levels and a healthy chart pattern, I would say the bulls are back... at least for now, until we meet the next matador. :)
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Labels: dow, fomc, fundamental analysis, fundamentals, investment, nasdaq, share market, stock market, stocks, technical analysis, technicals, us market, usa
posted by Jason Ng at 5:47 PM
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