Stock Market Analysis

Thursday, October 14, 2010

Jobless Claims Rebounds! Market Resilient!

The Dow moved sideways today, closing down by 1 point as jobless claims turned back above the 450K line.

Fundamentals
Jobless claims paid a short visit below the 450K line last week and came back with a vengeance today at 462K. Jobless claims have been threading along the 450K line all year and investors are definitely looking forward to seeing the number break below 450K. Yes, the US economy is still very soft, even the Feds admit it. However, lets not forget that the stock market is a discounting mechanism for future valuation and not a feedback mechanism for current valuations. As such, trying to line day to day economic numbers with what exactly is happening in the stock market typical ends in confusion for most people.

Technicals
Today's market action is totally technical in nature yet again. As I said in yesterday's commentary (which only paid subscribers would receive in their emails), the Dow is currently at the 11,000 resistance level along with the fact that it formed a significant up day on 13 Oct means a few sideways days along this level is to be expected. The Dow is currently in short term overbought condition as well, so I won't be surprised to see a short but healthy pullback perhaps to about 10,900 before breaking the 11,000 level decisively.

For now, the Dow remains in a short term bull trend, intermediate bull trend within a primary bull trend.
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Chart of Dow Made Using Telechart. Want Your Own Charting Software? Download FREE Now!

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