Stock Market Analysis

Tuesday, October 19, 2010

Dow Retreats to 10,900

The Dow pulled back by a huge 165 points today on the back of mixed retail sales numbers.

Fundamentals
Retail sales numbers released today were mixed with both releases telling completely different stories. However, housing starts surprised to upside showing a recovery in the single family homes sector (see Stock Market Calendar). Amidst the mixed bag of economic data, investors took profit and sold off strongly on strong volume.

Technicals
The Dow did the retreat to 10,900 points that I mentioned two days ago. Even though the pullback was strong and scary, all it did was take the Dow off its short term overbought condition and has yet to threaten the current bull trend. However, we would like to see some strength tomorrow as evidence that the 10,900 points short term support is holding so that the Dow can go straight for the April high. However, if it doesn't, immediate support will be at its daily 30MA at about 10,800 points.

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