Korean Concerns Continue...

The Dow continued to trade sideways along the 11,000 points support level as investors continue to await a resolution to the Korean issue.

Fundamentals
The US market continue to trade with a pessimistic note today even though all major economic data today turned in better than expected. Obviously investors are cautious of the possible effects of a melt-down in the Korean crisis which could turn world markets negative overnight. However, we can be sure that if the Korean leaders come to a peaceful resolution or that the crisis doesn't seem to have any legs, all these better than expected economic data will catch on very quickly and spur another strong leg up. For now, the world hangs on the balance.

Technicals
The Dow broke below the daily 50MA support level today, holding just above the 11,000 points psychological support level. The only positive thing about today's trading pattern is the fact that it traded well within yesterday's trading range. However, from this point forward, any kind of breakout, whether to upside or downside, can be expected to have significant leg. Immediate support level is now the daily 200MA at about 10630 points.

For now, the Dow remains in a short term neutral trend, intermediate bull trend within a primary bull trend.
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Welcome Back From Long Weekend!

Welcome back from Thanksgiving Weekend! Hope everyone had a fulfilling rest and are ready for action until Christmas comes.

It was certainly a cautious and sideways Thanksgiving week in the market last week even though GDP was better than expected and jobless claims broke decisively below the 450K level at last. Indeed, investors these days are extremely cautious of long weekends as nobody knows what will happen over a few day's period in this uncertain times.

However, it must be acknowledged that economic data continues to turn in encouragingly and the Dow continued to hold above its daily 50MA support level which is critical to the healthy progression of this intermediate bull trend.

This week, the first week of December 2010, is again a week of important economic numbers; ISM Index and Jobs Report (see Stock Market Calendar). With the present trend of improving economic data, odds once again favor to upside especially with traders willing to hold the market at support. Lets look forward to an exciting trading week ahead.

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

The Dow took a hit today ahead of the Thanksgiving weekend, closing down a huge 142 points.

Fundamentals
Even though GDP revision for Q3 turned in better than expected, investors sold off early on the expectedly lower retails sales and the uncertain Thanksgiving weekend ahead. Market opened down and stay down throughout the session with no clear strength or leadership. Existing home sales also turned in worse than expected with a month on month drop of 2.2%. However, that didn't seem to be the catalyst for today's beat down as futures were already pointing down hard before market open. Much of today's negativity seemed to have been passed over from Asia side as China market ended starkly lower due to the latest North Korean aggression against South Korea, affecting every other market that opened after that. Yes, thats how black monday started too. Tomorrow, we have the heavy weight numbers for the week, Durable Goods Orders, Consumer Sentiment and Jobless claims (see Stock Market Calendar). However, from today's market action, we could see that investors are clearly cautious ahead of the Thanksgiving holiday and may not be too ready to react to positive surprises. On the other hand, with such a huge drawdown today, there would certainly be bargain hunters early tomorrow's session, providing some support.

Technicals
The Dow took an unexpected hit today, correcting all the way back down to the critical daily 50MA support level. However, such sudden "Take Down" back to a critical support line from which the market just rebounded from is a very common phenomena and is usually a bear trap which will see a rebound to new highs right the very next trading day onwards. This, of course, is what we are hoping for ahead of the holiday. However, trading is not based on hopes alone. Today's sell-off had a healthy volume behind it which gives it some credibility. This makes tomorrow extremely critical. The Dow need to stage a significant rebound tomorrow off the 50MA line in order to re-enter the safe zone. Otherwise, we could see that intermediate correction that I was talking about before.

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

Welcome to ThanksGiving Week! Yes, this is going to be a holiday shortened week due to Thanksgiving on Thursday and a half day trading on Friday which we won't be expecting much action.

The Dow did a critical rebound off its daily 50MA line which is critical for the sustenance of the current intermediate bull trend. Indeed, last Thursday's rebound was very crucial to saving the market from dropping into an intermediate correction. Even though this is a holiday shortened week, there are still a few important economic releases this week which could either help the market go into a new bull leg or break it totally. GDP on Tuesday along with Durable Goods order and Jobless claims on Wednesday both can significantly affect the current shaky trend (see Stock Market Calendar).

On a weekly basis, the Dow is currently holding above its weekly 200MA, which is an important line to keep above in a bull trend. We would definitely love to see a strong followup on Monday and the index futures seems to be indicating strength on Monday right now. Typically, markets tend to do well in Thanksgiving week and Christmas week as long as its not in a strong bear trend. So we are also looking forward to a more positive week this week.

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

The Dow surrendered almost all of the gains from two weeks ago last week, retreating 2.2% on heavy profit taking.

Yes, all big single up days spur waves of profit taking and thats exactly what happened last week in a relatively quiet week without any major economic releases. Even though almost all gains have been surrendered, the Dow has been brought out of short term overbought territory and rebounded off the daily 30MA last Friday which is definitely a positive.

If the Empire State Index on Monday (see Stock Market Calendar) turn out well, it could fuel the continuation of this intermediate bull trend, leading the Dow higher from here onwards. However, if the market does not hold up and close significantly lower than the daily 30MA, then the market could go into a deeper correction as far down as 10,750 again.

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

The Dow made an impressive breakout last week, beating the April highs in one fell sweep, ending the week up 2.93% on a week on week basis.

After last week's impressive breakout, the Dow is once again in short term overbought condition and a few more days of going sideways or profit taking should be expected. The 11,250 level is now short term support and it is critical for the Dow to hold above this level if this intermediate bull trend is to have further legs.

It is going to be a quiet week ahead as we leave last week's heavy weight economic numbers behind us. Last week's data painted to us a picture of continued economic recovery at a slow pace which is what investors are looking for. This week would definitely see some of those investors take profit but that should not set off any panic.

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

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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Heavy Weight Week Ahead...

Not surprisingly, the Dow continued to move sideways last week, closing marginally lower by 0.13% week on week.

Investors continue to struggle with the 11,100 resistance zone last week as the bull continuously fought back early bears almost every day last week in order to keep the market sideways.

We are once again in the first week of a new month. The first week of every month is when the biggest and most influential economic data are released. We have the ISM index on Monday and Jobs Report on Friday, both of which are market movers. Investors are certainly looking forward to better than expected numbers in order for the market to stage a real breakout. However, the chart pattern does suggest a higher probability of a topside breakout than downside.

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