Stock Market Analysis

Sunday, August 29, 2010

Dow Rebounds...

The US Market staged an oversold rally last Friday as bond yields reached levels so low its no longer attractive to many investors. As such, we saw a 164 points surge in the Dow and a rebound in bond yields across the board as investors reallocate into equities. Yes, most big funds see-saw between bonds and equities in order to maintain their portfolio's risk exposure and to meet their profit target.

However, what made this rebound different from just another oversold rally is the fact that it occurred at an important support level, the 10,000 points level. This tells us that investors are finding value at around the 10,000 points area and that the rally has more substance than one that occurs at some other areas. We need to see if investors are going to see into the strength on Monday in order have a feel of whether the 10,000 points level is going to hold up and save the intermediate bull trend.

This week is the first week of September, which is a heavy weight week with important economic releases such as the ISM Index and the Jobs report. Both releases came in lousier than expected in the last round which led to a month long bearish sentiment. Lets see if this week changes anything.

For now, the Dow remains a short term bear trend, intermediate bull trend within a primary bull trend.

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


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