Black and White Brothers Week...
Markets closed sideways today (Friday) again amidst all the chaos created by the quadruple witching, consumer confidence numbers dropping to 6 months low and CPI rising 0.2%. All these numbers continue to tell one tale... that the Fed will not be cutting rates anytime soon. In fact, some analysts are saying that fundamentals do not matter anymore but what the Feds are likely to do. Even though I would agree to that for the short term, fundamental economy strength still matters in the long run.
Some readers may ask, "Obviously stocks were down today, why would you say the markets closed sideways?". Well, simply if the Dow closed within the range of the day before, it is essentially a sideways day as it has merely vibrated within where it did the day before.
Looking at the weekly charts, we see that the Dow and the Nasdaq composite is once again forming "Black and White Brothers" formation atop their respective 30MA. (Please read my post on 21 Dec 2006 for explanations... http://sharemarketcomments.blogspot.com/2006/12/daily-us-market-comments-21-dec-2006-by.html ) There is something different about the black and white brothers formation this time round... a typical strong B&W brothers formation is a closed candle followed by an open candle. This time round, it is an open candle followed by a closed candle. Such a formation is still bullish but it may form a down candle next before rebounding to new highs. This signal is further supported by the fact that the Dow has made a perfect double bottom setup since the dragon tail formation appeared 3 days ago. A double bottom setup, or what is commonly known as a "W" setup, has historically preceded many important rebounds.
The bears certainly look like it is going to sleep with a glitter of conciousness still remaining.
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Labels: dow, fomc, fundamental analysis, fundamentals, investment, share market, stock market, technical analysis, technicals, trade deficit, us economy, us market
posted by Jason Ng at 8:18 PM
1 Comments:
Very well said Pete. :)
Indeed, this is the problem faced by all developed nations and credit societies. In fact, I think Singapore is going down the same way too. Problem starts when people stop saving and start spending future money, betting their very lives on their ability to keep their jobs. Especially with a rising China in the background, I think it is time many developed nations, like my country Singapore, step up on financial education and develop other areas of competitiveness.
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