Market Opened To A Weak Start...

FUNDAMENTAL ANALYSIS
The Dow ended higher by 42.27 points today. Not bad considering the high level of uncertainty in the market today. On one hand, we have the good news that Dean is not going to hit the oil fields afterall, resulting in a pullback in crude price. On the other hand, we have another hedge fund collaspe due to credit crunch and leading indicators continuing to point towards slow growth (which could be a good thing actually). The Solent Hedge Fund collaspe brought the grim reality of the current credit situation back into focus again as it invested primarily in mortgage backed securities. Let's not forget that there is one sure way to remedy this situation for good and that we are very close to that solution right now... A cut in the Fed Fund Rate! The credit crunch supported by continued signs of a slowing economy are certainly all the reasons the Fed needs to move on to the next step of cutting fed fund rates after last week's fed discount rate cut. I remain optimistic that Uncle Ben will not sit by and do nothing in view of such imminent danger.

TECHNICAL ANALYSIS
A sideways day today in the Dow. Technically, it is not surprising to see a small sideways day following a huge up day. In fact, such a sideways day does pave the way for more upside to come. This is certainly a good followup to the Morning Star signal formed by the Dow last Friday. A Morning Star signal is a technical candlestick formation consisting of 3 candles. 1 down candle, 1 sideways candle and 1 up candle and is particularly strong when occurring at the bottom of a down trend with a dragon tail formation as the sideways candle. Short term indications continue to indicate growing bullish momentum and the total equity put call ratio also leaned towards call options for the first time since the correction started. The Dow looks good to continue upwards until it hits the first resistance level at the 13500 level (or until something changes so dramatically that it negates all our previous signals).


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