US Markets Pulling Up A Loose Sock?
FUNDAMENTAL ANALYSIS
US Market continue its advance today carried along by the global market. Never before have I seen such close and perfect correlation between the US Market and the rest of the world. The US Markets does show a significant correlation to many global markets but never at a degree where it goes up when they go up and down when they go down. Even as the US continues its efforts to create more favorable economic conditions for itself in Asia, few fundamental reasons emerged so far as to provide any real optimism. A gapping trade deficit with China remains one of US economy's greatest worry. US is also trying now to play "consultant" to Cambodia as the once poor country paves its way to becoming the next oil provider. Let's hope the US builds good business partners around the world soon or else investors should start to trade short to mid term and not put too much hope in a hold and pray strategy.
TECHNICAL ANALYSIS
Markets advanced yesterday in what looked like a follow up to the morning star formation I mentioned 2 days ago, however, it looks to me more like it is puling up a loose sock, an effort in vain. A follow up, especially at such a critical juncture, should be backed by a strong market concensus in order to ensure that it is a trend reversal and not a temporary pullback. Such a market concensus is displayed in a good advancing volume at critical reversal points. However, what I saw in the Dow was a lot of volume going both ways yesterday resulting in a sideways close and then an advance today on declining volume, indicating the interest of a decreasing number of participants. In fact, the Nasdaq composite closed lower than its open, resulting in a closed candlestick, suggesting a lack of bullishness, with volume continuing its decline. I fear what we are looking at now is not a trend reversal but a classic pullup on a bear trend. No trends move continuously in one direction only. All trends are marked with 3 to 10 days of pullbacks against the trend and this may be one of them. My educated hunches remain bearish. Swing traders may trade this pullup but always be ready to go back on the short side.
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US Market continue its advance today carried along by the global market. Never before have I seen such close and perfect correlation between the US Market and the rest of the world. The US Markets does show a significant correlation to many global markets but never at a degree where it goes up when they go up and down when they go down. Even as the US continues its efforts to create more favorable economic conditions for itself in Asia, few fundamental reasons emerged so far as to provide any real optimism. A gapping trade deficit with China remains one of US economy's greatest worry. US is also trying now to play "consultant" to Cambodia as the once poor country paves its way to becoming the next oil provider. Let's hope the US builds good business partners around the world soon or else investors should start to trade short to mid term and not put too much hope in a hold and pray strategy.
TECHNICAL ANALYSIS
Markets advanced yesterday in what looked like a follow up to the morning star formation I mentioned 2 days ago, however, it looks to me more like it is puling up a loose sock, an effort in vain. A follow up, especially at such a critical juncture, should be backed by a strong market concensus in order to ensure that it is a trend reversal and not a temporary pullback. Such a market concensus is displayed in a good advancing volume at critical reversal points. However, what I saw in the Dow was a lot of volume going both ways yesterday resulting in a sideways close and then an advance today on declining volume, indicating the interest of a decreasing number of participants. In fact, the Nasdaq composite closed lower than its open, resulting in a closed candlestick, suggesting a lack of bullishness, with volume continuing its decline. I fear what we are looking at now is not a trend reversal but a classic pullup on a bear trend. No trends move continuously in one direction only. All trends are marked with 3 to 10 days of pullbacks against the trend and this may be one of them. My educated hunches remain bearish. Swing traders may trade this pullup but always be ready to go back on the short side.
Technical Charts By Worden Brothers TC2007 Charting Software
Voted Best Software By Readers Of Stocks & Commodity Magazine Since 1993!
Online Trader Psychometric Test!
Labels: dow, fundamental analysis, fundamentals, investment, share market, stock market, technical analysis, technicals, us market, usa, window
posted by Jason Ng at 5:20 PM
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