Stock Market Analysis

Thursday, November 04, 2010

Fed Keeps Rate Unchanged... As Expected

The Dow gained 26 points as the Feds kept rates steady as expected, easing early worries.

Fundamentals
The Fed kept rates steady as expected, easing early fears of any negative surprises, encouraging the bulls to take back lost grounds and end the day higher. On the positive side, factory orders beat expectations to end at 2.1% versus 1.8% supporting the economic recovery scenario. Indeed, the economy is recovering according to the recent economic data but at a very slow pace. That didn't stop the stock market from pricing all that in advanced as the stock market is a discounting mechanism, not a feedback mechanism. A better than expected jobless claims on Thursday and jobs report on Friday will certainly provide the much needed stimulus to break out of the current stalemate.

Technicals
The Dow has remained sideways all the way to its 30MA support once again, which is a critical level to stay above for a strong short and intermediate bull trend. Falling below this line will set the Dow up for another intermediate pullback like we saw back in May. As such, this is definitely the time to stay nimble.

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