Techs Wake Up From Winter Slumber! Stocks Up!
FUNDAMENTAL ANALYSIS
The Techs has been in a slumber whole winter with lacklustre performance and earnings expectations, however, with Yahoo and Sun Microsystems inc. released favorable earnings report, investor confidence in the techs returned and lifted the markets broadly as a result. Ebay also rallied 4.85% in a day, Xilinx up 4.32%, Intel up 1.41%, Marvell Tech up 5.45%, Broadcom corp up 4.18% and Microsoft up 1.14%. It was as though the flood gates are suddenly opened and a rush of optimism flooded the markets. Even the "Sell-The-Tech" Cramer with his pessimism about the Tech sector, gave 2 tech picks today. There are no new economic data to support this sudden optimism and oil was up another $0.33 on unfavorable oil inventory numbers, so it seems like investors are indeed waiting for some great earnings release from the tech front before committing to the markets.
TECHNICAL ANALYSIS
Well well, just when we are about to lose hope in the Nasdaq composite, it rebounded off its 50 days moving average support level at last! This move alone totally negated the short term ditch that we have witnessed last week and, as I have said a few days ago, a rebound off this level could mean more upside to come. But didn't the index close marginally below the 50 days MA twice? Well, that is a common behavior of all support levels. Prices don't just rebound right off a support level, although sometimes they do. Most of the time, prices go slightly below it, bobbing up and down the surface very slightly before bouncing off. When we see such a slight breaching of a support level, we need to see a follow up on that breach the next day and then identify the next support level instead of falling into a panic. As it turned out, there was no follow up on the breach in this case and the Nasdaq composite rebounded nicely after accumulating some potential energy. The Dow continued to move according to plan, making yet another historical high, with no surprises at all. The Dow continues to be in a bull trend while the Nasdaq composite needs to break the 2500 to return to a bull trend from the current neutral channel. There is an obvious channel formed between the 2500 and 2450 level right now.
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The Techs has been in a slumber whole winter with lacklustre performance and earnings expectations, however, with Yahoo and Sun Microsystems inc. released favorable earnings report, investor confidence in the techs returned and lifted the markets broadly as a result. Ebay also rallied 4.85% in a day, Xilinx up 4.32%, Intel up 1.41%, Marvell Tech up 5.45%, Broadcom corp up 4.18% and Microsoft up 1.14%. It was as though the flood gates are suddenly opened and a rush of optimism flooded the markets. Even the "Sell-The-Tech" Cramer with his pessimism about the Tech sector, gave 2 tech picks today. There are no new economic data to support this sudden optimism and oil was up another $0.33 on unfavorable oil inventory numbers, so it seems like investors are indeed waiting for some great earnings release from the tech front before committing to the markets.
TECHNICAL ANALYSIS
Well well, just when we are about to lose hope in the Nasdaq composite, it rebounded off its 50 days moving average support level at last! This move alone totally negated the short term ditch that we have witnessed last week and, as I have said a few days ago, a rebound off this level could mean more upside to come. But didn't the index close marginally below the 50 days MA twice? Well, that is a common behavior of all support levels. Prices don't just rebound right off a support level, although sometimes they do. Most of the time, prices go slightly below it, bobbing up and down the surface very slightly before bouncing off. When we see such a slight breaching of a support level, we need to see a follow up on that breach the next day and then identify the next support level instead of falling into a panic. As it turned out, there was no follow up on the breach in this case and the Nasdaq composite rebounded nicely after accumulating some potential energy. The Dow continued to move according to plan, making yet another historical high, with no surprises at all. The Dow continues to be in a bull trend while the Nasdaq composite needs to break the 2500 to return to a bull trend from the current neutral channel. There is an obvious channel formed between the 2500 and 2450 level right now.
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Labels: fundamental analysis, investment, share market, stock market, stocks, technical analysis
posted by Jason Ng at 7:27 PM
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