Stock Market Analysis

Sunday, September 12, 2010

Quadruple Witching Week

The Dow traded sideways along its daily 200MA and weekly 30MA whole week last week, closing slightly higher by 1.38% on a week on week basis.

I was wrong about last week becoming a negative week but the market didn't make an upside breakout either. The Dow is up against a pair of extremely strong resistance levels which cannot be easily broken without some extremely convincing evidence. This week, what we saw are rising bond yields which indicates that investors are somewhat convinced back into equities but persistently higher Put Call Ratio, which is normally a pattern during bearish trend as speculators take leveraged positions on put options.

This is going to be another turbulent week with the Empire State Index on Wednesday, retail and jobless claims reports which everyone would be watching as well as Quadruple Witching on Friday (see Stock Market Calendar).

The Dow is currently short term overbought at these strong resistance levels on declining volume and I do not see it breaking out to upside this week either. Odds still favor a pullback this week and I definitely would not be newly long here.

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