Stock Market Analysis

Tuesday, December 15, 2009

Empire State Index Disappoints...

The Dow corrected down marginally by 49 points today as the Empire State Index disappoints.

The Empire State Manufacturing Index is a survery conducted monthly on various aspects of manufacturing in the New York region and is believed to lead the all important ISM index, which is what gave it its importance. The Empire State Index's general business condition index is what investors and traders watch out for. Reading above 0 indicates expansion and below 0, contraction. The Empire State Index turned in a disappointing 2.55 vs consensus of 25. The wide gap between the consensus number and the actual number caused equities to open in the red and remained red for the rest of the session.

The Empire State Index may only be part of the reason for the sell off today and a spike in put options transactions as reflected in the total equities put call ratio today (see Put Call Ratio Graph). The other part may be due to the FOMC announcement coming up tomorrow, which will definitely rock the market as it always does as well as Quadruple Witching on Friday, making profit taking a more sensible thing this week.

On the technical front, the Dow failed once again right at the top of its short term neutral channel but it isn't a severe failure as bullish momentum still remains in the ultra short term trend. As such, I would consider today's move more sideways than downwards. With so much volatility going on this week, I do not see the possibility of a strong breakout within this week.

For now, the Dow remains in short term neutral trend within an intermediate and long term bull trend.

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


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