Stock Market Analysis

Thursday, November 11, 2010

Profit Taking Continues...

The profit taking continues as the Dow closed down 73 points despite better than expected Jobless Claims.

Fundamentals
Jobless claims beat estimates of 450K (which is the level around which jobless claims have been all year long), turning in 435K, bringing the 4 weeks average down further. Jobless claims and the jobs report are the two main employment indicators for the US market and are definitely confirming indicators of a growing or weakening economy. Yes, they are not leading indicators since companies tend to fire as a last resort or hire only when business really turn for the better. Investors didn't react positively to today's release mainly due to the technical profit taking that is underway in the market now.

Technicals
Profit taking continues as traders take the Dow back down to the 11,250 level. In fact, I mentioned early in the week that the 11,250 level is now short term support and that it is critical for the Dow to hold above this level in order for the intermediate bull trend to continue strongly. So, the market is at the deciding point now. Will traders and investors decide to take back all of the gains of last Thursday? So far, there are no sure signs of bearishness on our indicators and the huge volume surge today suggest that the pullback might be over and that the 11,250 level might hold afterall.

For now, the Dow remains in a short term neutral 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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