Stock Market Analysis

Sunday, November 01, 2009

New Month & A Heavyweight Week Ahead

Welcome to a new month! Let's hope the new month brings a new breakout and new profits for all of us!

What was shaping up to be a rebound last Friday turned out as a dismal week with the Dow down 2.6% on the week, ending right on top of its 50MA line again.

Yes, the only explanation so far is the widespread consolidation sentiment near the 10,000 points level as the most important data last Friday, the Chicago PMI turned in way better than expected and above the 50 line at last, indicating economic expansion. Yes, traders have been taking profit whole week last week, bringing the Dow out of short term overbought and back down into short term oversold condition again. A look at the weekly charts doesn't make this retreat any more threatening than the many pullbacks that we have got along this rally so far. This means that the integrity of this rally is still intact for now. We need to see a rebound off the 50MA this week in order to preserve this rally. This is going to be a heavy weight week with the ISM index on Monday, FOMC Announcement on Wednesday and Jobs report on Friday (see Stock Market Calendar) and those numbers would certainly be the key to providing that much needed boost back to the 10,000 line.

For now, the Dow turns short term neutral trend within an intermediate and primary bull trend.

Chart of Dow Made Using Telechart. Want Your Own Charting Software? Download FREE Now!


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