Stocks Gained Despite Contracting Manufacturing!
FUNDAMENTAL ANALYSIS
Stocks were up today despite a greater than usual contraction on the ISM index, which reports on manufacturing growth, down to 49.3%. A figure below 50% indicates contracting manufacturing growth in the country. Evidently, the manufacturing capital of the world has already started to cast its effects all over the world and the rest of the world need to learn how to work with and grow with it. The main piece of good news that contributed greatly to today's continued gains is the lower than expected core PCE deflator, an inflation indicator which the Feds watch intently. The indicator reported only a 0.1% rise which is fantastic considering the year on year increase of 2.2%. This shows that inflation is indeed under control, especially so when the indicator has been increasing slower over the last 3 months. Nothing assures investors more than a controlled inflation and interest rates under control.
TECHNICAL ANALYSIS
Completely no surprise in the market actions today, technically. The Dow made yet another historical high as we have predicted last week when it ditched and the Nasdaq composite continued its journey up in a slow and steady fashion. Both indices are showing growing upside momentum while still not in the short term overbought region. This shows that there are more upside to go before the Dow pause to form another step in its staircase formation and the Nasdaq composite has to struggle at its 2500 resistance level once again. Many investors are concerned about the contraction in volume in the Dow today and deems it too early in a push for volume to be drying up. That is actually a false concern. The rally in the Dow so far has been a series of short term bursts and contractions in what I call the "staircase formation". It is not strange to see a burst and then contraction a couple of days later at all. That's the Dow game plan and as long as trend lines remain intact and the chart pattern maintains its integrity, there are no sense in finding bones in an egg at all. Oil challenged the $59 level today and failed, falling down $0.74 for the day, forming a shooting star candlestick formation... a strong bearish formation. It is always interesting to see such a candlestick formation when the sentiments on the streets remain bullish... lets see who wins the race...
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Stocks were up today despite a greater than usual contraction on the ISM index, which reports on manufacturing growth, down to 49.3%. A figure below 50% indicates contracting manufacturing growth in the country. Evidently, the manufacturing capital of the world has already started to cast its effects all over the world and the rest of the world need to learn how to work with and grow with it. The main piece of good news that contributed greatly to today's continued gains is the lower than expected core PCE deflator, an inflation indicator which the Feds watch intently. The indicator reported only a 0.1% rise which is fantastic considering the year on year increase of 2.2%. This shows that inflation is indeed under control, especially so when the indicator has been increasing slower over the last 3 months. Nothing assures investors more than a controlled inflation and interest rates under control.
TECHNICAL ANALYSIS
Completely no surprise in the market actions today, technically. The Dow made yet another historical high as we have predicted last week when it ditched and the Nasdaq composite continued its journey up in a slow and steady fashion. Both indices are showing growing upside momentum while still not in the short term overbought region. This shows that there are more upside to go before the Dow pause to form another step in its staircase formation and the Nasdaq composite has to struggle at its 2500 resistance level once again. Many investors are concerned about the contraction in volume in the Dow today and deems it too early in a push for volume to be drying up. That is actually a false concern. The rally in the Dow so far has been a series of short term bursts and contractions in what I call the "staircase formation". It is not strange to see a burst and then contraction a couple of days later at all. That's the Dow game plan and as long as trend lines remain intact and the chart pattern maintains its integrity, there are no sense in finding bones in an egg at all. Oil challenged the $59 level today and failed, falling down $0.74 for the day, forming a shooting star candlestick formation... a strong bearish formation. It is always interesting to see such a candlestick formation when the sentiments on the streets remain bullish... lets see who wins the race...
.
Labels: dow, fomc, fundamental analysis, fundamentals, investment, nasdaq, share market, stock market, stocks, technical analysis, technicals, us market, usa
posted by Jason Ng at 5:50 PM
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