The Dow Standing Strong Again!
Fundamental AnalysisThe 8.26% ditch in the Shanghai Index doesn't seem to have any real effect on the US Market anymore as investors learnt from Feb 27 that such dips tend to be temporary and does not mean anything at all. The drop this time round was actually stronger than the last time. On 27 Feb, the Shanghai index dropped 268.81 points, causing worldwide panic. This time round, the Shanghai index dropped 330.34 points, much higher than the last time, but investors are now clever enough to understand that it ought not affect the US market. Energy stocks also led the way today as oil prices surged more than 1% again. China stock market, being an immature, panic and greed driven market, is one that is expected to be very volatile with huge gains and drops. Investors worldwide should not take China stock market's actions as reflective of economic performance... it is simply not at that level of maturity yet.
TECHNICAL ANALYSIS
Again, no surprise today as the Dow continues to complete yet another step in the staircase formation. Nothing look out of sorts today and I would expect a new step being formed within these 2 days. The Dow has once again entered the short term overbought region and I would expect it to stay overbought to a while as it is used to trading at such overbought levels and still growing. Volume profile is also favorable so far with volume steadily declining before a new step is being made. This is the textbook volume profile for the Staircase formation. This rally just isn't going to go away just yet.
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posted by Jason Ng at 7:40 PM
2 Comments:
Jason,
Some of the funds taken out from China are probably finding a new home in the US! =) Something else that I noticed is that some of the Chinese companies trading in US popped near the EOD, today (SINA, BIDU, CYD, FMCN...etc).
HappyTrading!
I totally agree. :) Many chinese investors are also investing in overseas markets too. I think this is a very healthy cycle. Let the manufacturing country do the manufacturing and let the most developed capitalist country manage those money made. I noticed also that chinese companies listed in the US tends to follow the US market trend rather than chinese market trends.
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