Stock Market Analysis

Thursday, April 12, 2007

Stocks Rallies Despite Rotten Fundamentals

FUNDAMENTAL ANALYSIS
A very surprising day at the markets today as the Dow rallies 68.34 points and the Nasdaq composite rallies 21.02 points despite a continuing barrage of bad news. Just when all hopes of a rate cut has been buried, a surge in jobless claims and rising oil price added early pressure to the market. However, it wasn't long before a barrage of bargin hunters stormed the markets and lifted it throughout the trading session. Seriously, this kind of strong, systematic lifting of the market always make me think some big institution is behind it and the first one that comes to my mind is the Feds themselves. It is no secret that the Fed window has been systematically diverting big chunks of money into the market, as if in preparation for the baby boomers' drawout of the market in the near future. Such systematic buying would definitely be able to lift the markets and make it look nice and rosy for now in order to continue attracting investors... that is definitely what the Feds want.

TECHNICAL ANALYSIS
What looked like a strong up day today was really just another sideways day. The Dow has opened and closed within yesterday's trading range and the Nasdaq composite has not made a significant new high for the past 4 trading days. Volume was mediocre and momentum indicators are not showing a significant bullish momentum too. All in all, today's rally look too much like a fake out to me. In fact, the Dow ended in a lower high and a lower low, which is a bearish sign. However, as long as it remains within the Secret Bullish Channel, it can still go up... but that does not mean it cannot break the channel to downside. That is the thing about channel analysis... it serves only as a guide. It is as good as looking as a train rail and guessing where a train might go, but lets not forget that trains sometimes de-rail too.


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