Stock Market Analysis

Tuesday, October 12, 2010

Market Continues Sideways

The Dow made another sideways day today, gaining a marginal 10 points as sales data recovers.

Fundamentals
The slew of sales data today eased consumption fears as both the Store Sales and Redbook turned in positive. The Fed's inclination for further easing in the 2pm FOMC minutes release (see Stock Market Calendar), also helped keep the market positive through the end of the day from a largely mixed trading day. So far, the trend for economic data seems to be on the up and up once again, coming back from the past few months of down and downs. Investors seem to be trading cautiously today with some reallocation back into the safety of bonds, lifting long term bond yields. This sentiment is also echoed in the Total Equities Put Call Ratio as options traders made a big rush into put options, lifting the ratio significantly above par. Such aggressive put trading can only mean traders are taking note of the weekly 200MA resistance level and are beginning to take some action for protection.

Technicals
The Dow continued to move sideways around its 11,000 points zone which is where the weekly 200MA resistance level is right now. So far, the Dow is showing a lot of promise and potential energy. However, the weekly 200MA isn't a resistance level that is historically easy to break. It is more reasonable to expect the Dow to trade sideways along this level for a couple of weeks before a decisive breakout is possible. Well, at least this short bull run has enabled me to successfully make a grand 66% profit with call options on WYNN today. See how I did it at http://www.mastersoequity.com/MOE_latest_win.htm.

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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