Dow Sideways Despite Unchanged GDP
The Dow continued to move sideways today, gaining a marginal 37 points or 0.39% despite a favorable Q2 GDP revision.
Fundamental Analysis
The revision to Q2 GDP was widely speculated to be a negative one due to the huge rebound in the initial number. However, it was held unrevised vs the consensus of correcting down to -1.5% from -1%. Even though jobless claim was slightly higherthan consensus due to its volatile nature, it didn't stop its 4 weeks moving average from contiuing its trend downwards. So far, every economic number has been screaming and supporting economic recovery so, where are the buyers?
Technical Analysis
The stock market has always been more technical biased than news biased, which is why its behavior continue to baffle amateur options traders worldwide. As I have always said, 3 to 5 days of sideways or slightly downwards days follow huge single day gains are common and healthy market behaviors. It allows the short term overbought condition created by the single day rally to be worn off and allows the short term moving averages which represents support for short term and intermediate term trends to catch up, reducing the possibility of huge draw downs. In fact, drawing back down to the 30 days moving average line before rebounding to new highs should not surprise you. This is why this is the market for longer term traders or day traders.
For now, the Dow is in all out bull trend.
Learn Options Trading for FREE!
Fundamental Analysis
The revision to Q2 GDP was widely speculated to be a negative one due to the huge rebound in the initial number. However, it was held unrevised vs the consensus of correcting down to -1.5% from -1%. Even though jobless claim was slightly higherthan consensus due to its volatile nature, it didn't stop its 4 weeks moving average from contiuing its trend downwards. So far, every economic number has been screaming and supporting economic recovery so, where are the buyers?
Technical Analysis
The stock market has always been more technical biased than news biased, which is why its behavior continue to baffle amateur options traders worldwide. As I have always said, 3 to 5 days of sideways or slightly downwards days follow huge single day gains are common and healthy market behaviors. It allows the short term overbought condition created by the single day rally to be worn off and allows the short term moving averages which represents support for short term and intermediate term trends to catch up, reducing the possibility of huge draw downs. In fact, drawing back down to the 30 days moving average line before rebounding to new highs should not surprise you. This is why this is the market for longer term traders or day traders.
For now, the Dow is in all out bull trend.
Learn Options Trading for FREE!
posted by Jason Ng at 5:34 PM
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