Stock Market Analysis

Sunday, August 15, 2010

Intermediate Bull Trend In Danger

The Dow dropped 350 points last week as investors got continuously bombarded by weaker than expected economic numbers both in the US and overseas. Jobs market data continue to worsen with a much higher than expected jobless claims following a poorer than expected jobs report the week before. All these showed that the US economy is not yet ready to start on its own without strong government intervention and led to investors revaluing equities across the board.

Last week's drop was also supported by a continued decline in bond yields (see Bond Yield Curve) as investors reallocate to the safety of bonds along with a strong short term bearish divergence on the RSI. All these tell us that the new intermediate bull trend is now in danger. In fact, the Dow is trading once again below its weekly 30MA on the weekly chart which eradicates any short term bullishness.

There are also a few important economic indicators this week that may set the market into a deeper bear trend; The Empire State Index on Monday, Jobless Claims, Leading Indicators and Philley Fed on Thursday.

For now, the Dow remains in a short term neutral 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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