Stock Market Analysis

Monday, April 02, 2007

Oil Lifts Energy Sector, Floats Market

FUNDAMENTAL ANALYSIS
Stock market closed very slightly up today as the Dow closed up 27.95 points and the Nasdaq composite closed up 0.62 points. In a way, stock markets barely stayed afloat today and much of this bouyancy has been contributed by a bargain hunting spree in the Energy and Utilities sector following a drop in oil price from it's intraday high of $66.69. Major indices actually spent most of the day in negative territory as the ISM index turned out worse than expected and comments from St. Louis Fed President William Poole that the Fed is unlikely to cut rates even if the economy slows down. As we can see from the recent market actions, sentiments remained largely mixed even though April was a historically good month for the stock markets. Certainly, times have changed... or have it?

TECHNICAL ANALYSIS
I was surprised today by the mixed market action as the Dow and the Nasdaq Composite closed largely sideways. One thing that went right was that major indices did open up and end up as I mentioned last Friday (that after a huge doji day with rising volume, the market will end in the direction of its opening the next day.). That does mean that the bulls have won the day, doesn't it? In a way, it might. A new, interesting twist, has been created today in the Dow. Looking at the daily charts, the Dow seems to be secretly forming a bullish channel. The probability of a Dow rebound remains high as indicated by a strong 30MA support on the weekly chart, however, I still think it will fall back down through that channel to the 12100 support level as participation in today's positive move remains weak. But, if we see a strong positive day tomorrow, then this secret channel may well be real and we might indeed be in for another positive April.


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