Stocks Mixed On Rising Oil Prices and Unemployment!
FUNDAMENTAL ANALYSIS
The Dow closed marginally lower on rising oil prices and rising unemployment. The oil bull continued its charge towards the $60 line today to close slightly above $59. The cold weather and the OPEC production cuts are definitely the main mover of oil prices and with its current velocity, it will not be a surprise to see oil above $60 once again next week. Let's not forget that we are in a period where oil prices tend to be higher than usual over the years. I would say a more accurate picture of oil price should emerge only after the winter chills. Companies also put on less jobs than usual, resulting in rising unemployment. Even though that could be interpreted as a sign of weakness in the economy, I do not think it has such a big impact on the stock markets. What we saw today was probably just a small shakeup from investors in the Depression Worry camp as advancers still led decliners for the day and the Nasdaq composite ended higher regardlessly. Let's not forget that most investors are still in the Inflation Worry camp, not the Depression Worry camp. With hourly earnings rising just 0.2%, the Fed's concern over inflationary wages are eased for now, as investors in the Inflation Worry camp smiles. Even though oil prices are expected to continue its bullishness next week, I do not foresee that being an event that can shake the bullishness that is in the markets as the economy comes to a soft landing as most investors hoped.
TECHNICAL ANALYSIS
It seems like these days, the Dow is more and more eager to form another step in its staircase formation as soon as new historical highs are made. With the Dow at short term overbought condition, it's not surprising to see it go down slightly before rising up to new historical highs. Traders who are utterly confused with all the staircase formation talk in the Dow so far and wants a simpler way to trade the Dow for the mid to long term, an easier way will be to monitor its 30 days simple moving average. As a rule of thumb, as long as its 30 MA is rising, you can continue to go long on the Dow. When the Dow close below the 30MA, it is time to hold and when the 30 MA is pointing down, it is time to sell and go short. With the Dow making very short bursts and retreats, it is almost impossible to momentum trade or short term swing trade the Dow. The Nasdaq composite continues to rise slowly and steadily as it lingers just slightly off its short term overbought region. With the 2500 resistance level looming just ahead and oil prices continuing its bullishness, driving the energy sector on, the undercurrent is strong for Nasdaq to make a break through this time.
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The Dow closed marginally lower on rising oil prices and rising unemployment. The oil bull continued its charge towards the $60 line today to close slightly above $59. The cold weather and the OPEC production cuts are definitely the main mover of oil prices and with its current velocity, it will not be a surprise to see oil above $60 once again next week. Let's not forget that we are in a period where oil prices tend to be higher than usual over the years. I would say a more accurate picture of oil price should emerge only after the winter chills. Companies also put on less jobs than usual, resulting in rising unemployment. Even though that could be interpreted as a sign of weakness in the economy, I do not think it has such a big impact on the stock markets. What we saw today was probably just a small shakeup from investors in the Depression Worry camp as advancers still led decliners for the day and the Nasdaq composite ended higher regardlessly. Let's not forget that most investors are still in the Inflation Worry camp, not the Depression Worry camp. With hourly earnings rising just 0.2%, the Fed's concern over inflationary wages are eased for now, as investors in the Inflation Worry camp smiles. Even though oil prices are expected to continue its bullishness next week, I do not foresee that being an event that can shake the bullishness that is in the markets as the economy comes to a soft landing as most investors hoped.
TECHNICAL ANALYSIS
It seems like these days, the Dow is more and more eager to form another step in its staircase formation as soon as new historical highs are made. With the Dow at short term overbought condition, it's not surprising to see it go down slightly before rising up to new historical highs. Traders who are utterly confused with all the staircase formation talk in the Dow so far and wants a simpler way to trade the Dow for the mid to long term, an easier way will be to monitor its 30 days simple moving average. As a rule of thumb, as long as its 30 MA is rising, you can continue to go long on the Dow. When the Dow close below the 30MA, it is time to hold and when the 30 MA is pointing down, it is time to sell and go short. With the Dow making very short bursts and retreats, it is almost impossible to momentum trade or short term swing trade the Dow. The Nasdaq composite continues to rise slowly and steadily as it lingers just slightly off its short term overbought region. With the 2500 resistance level looming just ahead and oil prices continuing its bullishness, driving the energy sector on, the undercurrent is strong for Nasdaq to make a break through this time.
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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 6:48 PM
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