Stock Market Analysis

Thursday, January 07, 2010

Uncertainty Continues...

Another extremely mixed and uncertain day in the market today as the Dow nudged marginally higher by 33 points.

The market has been in some kind of tug of war between the bulls and bears ever since 2010 started. You can clearly see the bulls and bears fighting, taking the market from negative to positive or vice versa intraday and then ending it all mixed. Options traders clearly don't know what to think of all these mess and has kept total equities put call ratio largely stagnant for the past 4 days at about 0.7. Bond yields hardly moved today as well. Is everyone waiting for the unemployment figure tomorrow? Indeed, if unemployment moves higher, it will certainly be a market breaker. From the leading indicators so far, unemployment rate should be stagnant at 10% or slightly lower. However, investors are clearly cautious as they have made a good profit the past year so far.

On the technical front, there are no indications of strength and the market remains in short term overbought condition. As such, I stand by my view on an imminent pullback even if the market stage a single day topside breakout within the next few days. Such a breakout would give profit takers the golden opportunity to sell-off, leading to the pullback I have talked about for days.

Even though the market is uncertain, it didn't stop us from making another 2 new wins using my Star Trading System options swing trading methodology. Will be posting new results tomorrow.

For now, the Dow remains in 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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