Stock Market Analysis

Tuesday, December 08, 2009

Store Sales Disappoints...

The Dow dropped by 104 points today as store sales reported much worse than expected holiday sales.

Store sales (see Stock Market Calendar) reported in -1.3% today vs last week's -0.1%, indicating worsening consumer spending once again and poor holiday sales. In fact, year on year change fell from 3.1% to 2.6%, erasing much of the hope for the return of consumers this year. Yes, with lower accessibility to credit, we should not see holiday sales the way they were before the crisis. Almost everyone purchased on credit in the credit based society that has been created in the US and is what has been driving sales every holiday.

Market opened deeply red and stayed red throughout the session. However, little to no change was seen in the bonds and options market. The bond yield curve remained relatively still and total equities put call ratio remained completely still. This shows that speculators and traders are still mainly on the watch and could buy into the dip tomorrow when market opens.

On the technical front, whatever little short term bullish momentum built up by the Dow over the past week diminished all at once today. In fact, today's close is a dangerous one as it is the lowest close since 13 November. Yes, it is indeed unreasonable for the Dow to stage a topside breakout without first taking a break and retesting the 50MA like it has done over the past few months. Volatility is the order of the day with the market this toppy. In fact, even if traders do step in tomorrow, it will hardly change anything. Probability remains very low for a topside breakout as long as the Dow doesn't go back to a short term oversold condition.

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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