Winter Chills Set In On The Bulls...
FUNDAMENTAL ANALYSIS
Markets took a beating as a snow storm takes New York city today. The chill seems to have set in on the markets as well as the Dow took a 0.45% beating and the Nasdaq composite erased 7 days of gains, collapsing down 1.16%. Everything in the world seems connected in all ways. A comfortable warmer winter gave the markets a boost and when the snow come back, the markets go into hybernation too. This avalanche was due mainly to a severe letdown in the Financial and Tech sector as borrowing rates increased. Let us not forget that the Financial sector contributed to 8% of the 11% growth in the S&P500 and a correction in the financial sector will certainly make itself heard. Decliners in the Financial Services sector led advancers by more than 3 : 1 and decliners in the Nasdaq 100 led advancers by more than 8 : 1! The Fed's hawkish statement underlying that inflation is still a concern further depressed investor sentiments. Next week is another week of economic releases and that could be another reason for the bail out today. Investors would want to play it safe by taking profits off the table before the uncertainty set in next week.
TECHNICAL ANALYSIS
I was surprised today at how readily the markets corrected today by such a great magnitude. I expected the Dow to take a slight dip before it climbs to new highs and that the Nasdaq composite will struggle against its 2500 resistance level but what surprised me was the magnitude and the readiness at which it happened. Well, what was again not so surprising was that the markets are used to doing things like that anyways. That is why technical traders like us read the overall chart patterns and not get all caught up with what happened on any particular day. Both the Dow and the Nasdaq Composite closed near their 30 days moving average support level, which are still healthy. As the indices are still only very slightly off their short term overbought condition, it will not be strange to see Nasdaq trade sideways a little for a few days along the 30 days moving average before mustering enough energy for another charge. As for the Dow, I see that it has completed another step in its staircase formation and is ready for a rebound to new highs and we might see that happen within these few days. But does that mean that the Dow will continue to rise endlessly? Definitely Not. So what will the first indication of a correction be? A Close Below The 30 days Moving Average.
Technical Charts By Worden Brothers TC2007
Ultimate Forex Trading Machine!
.
Markets took a beating as a snow storm takes New York city today. The chill seems to have set in on the markets as well as the Dow took a 0.45% beating and the Nasdaq composite erased 7 days of gains, collapsing down 1.16%. Everything in the world seems connected in all ways. A comfortable warmer winter gave the markets a boost and when the snow come back, the markets go into hybernation too. This avalanche was due mainly to a severe letdown in the Financial and Tech sector as borrowing rates increased. Let us not forget that the Financial sector contributed to 8% of the 11% growth in the S&P500 and a correction in the financial sector will certainly make itself heard. Decliners in the Financial Services sector led advancers by more than 3 : 1 and decliners in the Nasdaq 100 led advancers by more than 8 : 1! The Fed's hawkish statement underlying that inflation is still a concern further depressed investor sentiments. Next week is another week of economic releases and that could be another reason for the bail out today. Investors would want to play it safe by taking profits off the table before the uncertainty set in next week.
TECHNICAL ANALYSIS
I was surprised today at how readily the markets corrected today by such a great magnitude. I expected the Dow to take a slight dip before it climbs to new highs and that the Nasdaq composite will struggle against its 2500 resistance level but what surprised me was the magnitude and the readiness at which it happened. Well, what was again not so surprising was that the markets are used to doing things like that anyways. That is why technical traders like us read the overall chart patterns and not get all caught up with what happened on any particular day. Both the Dow and the Nasdaq Composite closed near their 30 days moving average support level, which are still healthy. As the indices are still only very slightly off their short term overbought condition, it will not be strange to see Nasdaq trade sideways a little for a few days along the 30 days moving average before mustering enough energy for another charge. As for the Dow, I see that it has completed another step in its staircase formation and is ready for a rebound to new highs and we might see that happen within these few days. But does that mean that the Dow will continue to rise endlessly? Definitely Not. So what will the first indication of a correction be? A Close Below The 30 days Moving Average.
Technical Charts By Worden Brothers TC2007
Ultimate Forex Trading Machine!
.
Labels: dow, fundamental analysis, fundamentals, housing, investment, nasdaq, oil prices, share market, stock market, stocks, technical analysis, technicals, us market, usa
posted by Jason Ng at 7:35 PM
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