Stock Market Analysis

Monday, December 13, 2010

Leading Indicators Week

The Dow ended up marginally higher by 0.25% on a week on week basis in a range bound trading week last week.

The market traded sideways last week on light volume due to a lack of significant economic data. However, the mood in the market recovered slightly last Friday as consumer sentiments turned in better than expected. Consumers are the backbone of the US economy, as such, higher consumer sentiment always works well for the stock market. The Dow gained 40 points last Friday on the news, marking the biggest single day gain last week. Every third week of the month is forward looking data week with a slew of data which leads the following month's ISM index. This week's Empire State Index on Wednesday, Philley Fed on Thursday and Leading Indicators on Friday are such leading indicators (see Stock Market Calendar). Adding to the potential volatility is the FOMC Announcement on Tuesday afternoon and the Quadruple Witching on Friday.

The Dow held an important slightly positive week following the rebound off the 200WMA 2 weeks ago. This positive week is extremely important in establishing the strength of that rebound and sets the stage for more possible upside. On a daily basis, the Dow continues to be slightly off short term overbought condition and would thus set the stage breaking the November high.

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