Stock Market Analysis |
Tuesday, July 31, 2007
Monday, July 30, 2007
The Rebound Begins?
FUNDAMENTAL ANALYSIS
The Dow gained 92.84 points today in a spectacular come back, kicking off the week on a high note. Much of the gains has been due to a sharp 1.2% rebound in the extremely influential Finanical sector. The Financial sector was beaten down last week amidst fears of possible credit crunch. Helping the market along is a slight retreat in crude oil prices too. Apart from these, there wasn't much significant events driving the market, which brings us to the technical aspects.
TECHNICAL ANALYSIS
Today's market action didn't come as a surprise as I mentioned yesterday that the Dow should start to level off and trade sideways a bit for the weekly 30MA line to catch up and then stage a full scale rebound. Looks like it is happening at last and more significantly, it is happening right on top of the 13250 support level, which has been a significant support level since June 07. I will be watching for a possible entry soon.
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Labels: dow, fomc, fundamental analysis, investment, option trading, share market, us economy, us market
Sunday, July 29, 2007
Will The Dow Continue To Fall This Week?
My take is that it's drop is almost, if not already, done. Remember the weekly 30MA line that I have been talking about for weeks? Last week's drop of 585.61 points has brough the Dow very close to its weekly 30MA line and ready for a rebound. This is also supported by a huge surge in the VIX and the Dow touching the 13260 short term support level while it's short term stochastics entered overbought region. All indications seems to support a rebound at this level. However, as we all can see, the weekly 30MA level is somewhere around the 13000 level... does it mean that the Dow needs to visit 13000 in order to rebound? Yes and No. The Dow can start to trade sideways for a few days in order for the weeklyu 30MA to catch up before staging a rebound or, yes, it could just go straight down to 13000 before rebounding. Both scenarios warrant a hold if you are long on the market and a hold if you have not entered yet. Traders should see a definite rebound before entering.
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Labels: option trading, stock market
Thursday, July 26, 2007
DOWn Over 300 Points!!
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Wednesday, July 25, 2007
Dow Gains Ahead Of GDP Release
Friday is going to be a heavy weight day with the GDP and Consumer Sentiments release. The Dow gaining over 60 points in one day today seems to indicate a strong bullish sentiment on the releases on Friday morning. GDP measures the dollar value of all goods and services produced within the borders of the United States, regardless of who owns the assets or the nationality of the labor in producing that output and is the most comprehensive measure of the performance of the U.S. economy. Healthy GDP growth is between 2.0% and 2.5% (when the unemployment rate is between 5.5% and 6.0%). This translates into strong corporate earnings, which bodes well for the stock market.
TECHNICAL ANALYSIS
No surprise today as the Dow gains a little, within yesterday's trading range as it continues to play within the channel that I defined yesterday. I don't think we will see any serious breakouts anytime soon.
Tuesday, July 24, 2007
The Dow Submits To Might 14K!
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Monday, July 23, 2007
Crude Oil Corrects...
FUNDAMENTAL ANALYSIS
Crude oil fell slightly today, spurring a small bout of buying in this completely "newsless" day, lifting the Dow a grand 92.34 points. The internals, however, don't seem to tell the same 92.34 points gain story. Decliners surprisingly led advancers! Yes, on a day where there were more losers than winners, the Dow gained over 90 points, suggesting that those stocks that gained, gained by A LOT! We all know what follows such strong surges, don't we? I seriously suspect we are looking at a fake out today.
TECHNICAL ANALYSIS
Not surprising to see a little buying after a strong drop of over 100 points. The Dow formed a small candle within the body of yesterday's huge closed candle, basically a day of no significance. The 14000 resistance level still looks strong, causing a lot of uncertainty in the market. There are no clear technical indications that the 14000 level is going to be breached anytime soon... low volume, declining momentum, trend indications weak... its going to take a miracle to break the 14000 level tomorrow.
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Sunday, July 22, 2007
The Dow Continues To Struggle At 14000
Thursday, July 19, 2007
The Dow Stopped At Critical 14000 Resistance Level...
Wednesday, July 18, 2007
The Dow Ends 5 Days Streak
FUNDAMENTAL ANALYSIS
The Dow ends its 5 days winning streak under heavy profit taking as CPI numbers match analysis expectations. Even though CPI numbers matched analysis expectations, it is a rise nonetheless and left investors disappointed and wondering if inflation is truly under control. The Consumer Price Index (CPI) is a measure of the average level of prices of a fixed basket of goods and services purchased by consumers. The monthly reported changes in CPI are widely followed as an inflation indicator. Generally, a higher inflation figure offers support to the dollar as it suggests that US interest rates need to rise. That is what investors fear most now. However, we do see a bullish undercurrent as buyers stepped in during the last hour, lifting the Dow off its deep intraday low.
TECHNICAL ANALYSIS
The Dow ended in a huge hangman signal today. A hangman signal is a classical bearish signal that needs to be confirmed by a bearish followup. It is highly probable that this signal will turn the Dow down to the 30MA level as volume has been rising daily without any significant gain in the Dow, suggesting the presence of a resistance level. Certainly a tricky time to be trading.
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Tuesday, July 17, 2007
The Dow Gains Again On Favorable PPI
Monday, July 16, 2007
The Dow Makes New Highs Ahead Of FOMC
FUNDAMENTAL ANALYSIS
What a day! The Dow gained 43.73 points after the NY Empire State Index beat estimates by a mile, starting a day of strong buying amidst resilient profit taking. The NY Empire State Index is a seasonally-adjusted index that tracks the results of the Empire State Manufacturing Survey. The survey is distributed to roughly 175 manufacturing executives and asks questions intended to gauge both the current sentiment of the executives and their six-month outlook on the sector. With investors further assured of economic growth, tomorrow's PPI numbers will give a preliminary look at the inflationary pressure. Investors will no doubt love a retreating number tomorrow.
TECHNICAL ANALYSIS
The Dow continues a rather dangerous climb along an extremely steep cliff today as volume continues to retreat steadily indicating declining interest in the rally. If the Dow should tee off and trade sideways for a couple of days before the next big gain, then it would have formed a new staircase formation and that would give it a strong reason to go further but if the Dow should continue to climb steeply like that, I am afraid with the declining volume, we could see a significant contraction soon.
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Sunday, July 15, 2007
The Dow Flies Ahead Of Schedule!
Wednesday, July 11, 2007
Stocks Rebounds...
FUNDAMENTAL ANALYSIS
The Dow staged a rebound today like it did the last time it ditched on 20 June. It is certainly not unusual to see some accumulation after such heavy selling. There didn't seem to be any convincing market movers today except for some take overs, which has been happening throughout the year, and comments that Bear Stern's hedge funds will unwind in an orderly fashion. On the downside, we have crude inventory lower than expected for a second straight week, rallying crude oil prices even further. Crude oil prices will certain put some pressure on the market should it continue to move higher.
TECHNICAL ANALYSIS
The Dow looks like it is repeating the exact same pattern it did the last time it came so close to new highs on 20 June. One big drop, followed by one recovery day and then the definite drop down to the bottom of the channel. I maintain the same assessment I had yesterday.
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Tuesday, July 10, 2007
The Dow Decides...
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Monday, July 09, 2007
The Start Of Another Rally?
FUNDAMENTAL ANALYSIS
The Dow closed an inch higher by 38.29 points today as optimism surrounds the start of the second earnings season for the year. Bond yield and crude price pulling back slightly also helped to fuel some optimism in the market. In fact, with a week like this, having little heavy weight economic releases, a 38.29 points increase already sounds pretty reasonable as volume continues to be way below average. This earnings season is expected to be a positive one, mirroring the gradual pick up of the US economy. So, let's cross our fingers as they unfold.
TECHNICAL ANALYSIS
The Dow is now right at the top of the sideways channel and a few points from a new historical high. Volume is weak as participation in the move continues to be unconvincing. Unless it does a surprisingly strong breakout to upside tomorrow, the Dow will simply correct back into the sideways channel while the weekly 30MA continues to close in. It is not likely for the Dow to stage a sustained rally with the weekly 30MA so far below it. It is time to be cautious.
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Sunday, July 08, 2007
The Dow Continues Our Game Plan
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Thursday, July 05, 2007
So far so good...
Monday, July 02, 2007
More Signs Of Economic Pickup!
FUNDAMENTAL ANALYSIS
Stocks staged an encouraging rally today as the Dow closed up 126.81 points. A renewed wave of investor confidence flooded the market as bond yields begin to drop, mergers begin to pick up and the ISM index beat analysis estimates. The ISM index for June turned in at 56.0 with estimates at 55.0, which is the highest in 14 months! What does this mean? This means that the US Economy is expanding at the quickest pace in 14 months! A reading above 50 denotes an expanding economy and a reading below 50 denotes a contracting economy. Sound economic fundamentals are always the pillars of stock market expansion. To this point, I remain optimistic, for now.
TECHNICAL ANALYSIS
The Dow established a floor for the sideways channel today with its rebound. It now seems obvious that the Dow might trade within a 13250 - 13700 channel until the weekly 30MA line catches up before a real, sustained rally can happen. However, this is not to say that it will not start to do so now. Now that we have the channel floor and ceiling established, a break above the ceiling on strong volume can be deemed as a breakout and the start of a rally.
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