Stock Market Analysis

Tuesday, March 09, 2010

Market Continues Sideways As Expected

The Dow closed another sideways day marginally upwards by 11 points today.

The US market has been largely sideways since last Friday's rally as expected in order to digest away some short term overbought sentiment. What is evident these couple of days is that there is still a very strong underlying bullish sentiment with the NASDAQ composite moving slightly ahead of the market as usual. However, this moving ahead has increased the possibility of a short term pullback before the market can go any higher as the distance between the NASDAQ composite and its daily 30MA is now way too wide, keeping it in a grossly short term overbought condition. In fact, the NASDAQ composite has already beat the January highs which justifies a little pullback before it will go any higher.

Yes, in fact, options traders are already moving into, at least for the short term, put options as the total equities put call ratio collasped over 20 basis points today (see Put Call Ratio Chart).

So far, the US market has been conclusively technical driven, moving in predictable patterns despite economic data or news. The kind of market that I like.

For now, the Dow remains in all out bull trend.

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