Stock Market Analysis

Wednesday, December 15, 2010

Dow Beats November High

The Dow beats the November high, closing up 47 points today, after retreating from intraday high following the Fed announcement.

Fundamentals
The US market started out strong on a slew of better than expected consumer data even though profit taking set in quickly following the Fed announcement in the afternoon. Retail sales numbers released today was better than expected and would likely give support to a better ISM index report next month. So far, it has been a pretty positive year on the consumer side as sales picked up on a year on year basis as indicated by today's data. The Fed decided to keep rates unchanged as expected and that led immediately to a profit taking, taking the market off intraday highs as is the norm for Fed announcement days in recent months. Tomorrow's Empire State Index may continue the trend of better than expected economic data and encourage investors back into the market to take back what was lost today.

Technicals
Today's market action is a healthy continuation of the short term bull trend since the Dow rebounded from its daily 50MA. In fact, the Dow beat the November high by such a slight margin that makes one wonder if we should see a slight pullback over the next two days before the Dow has enough energy to make a clean breakout. The Dow is slightly in the short term overbought condition right now but there are no clear technical indications of weakness yet. As such, the Dow might make one strong day these couple of days before going into a slight retreat.

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