Stock Market Analysis

Tuesday, February 08, 2011

Retail Beats Expectations

The Dow continued its strong bull run on strong retail numbers, closing up by another 71 points.

Fundamentals
Retail numbers turn in strong today, fuelling the bull market. Retail made a sharp recovery this week after last week's lackluster performance due to heavy weather in the east. In a week with no major releases such as this one, retail sales and jobless claims would usually be the driver. Total equities put call ratio continue to trade steadily below par in favor of call options. Investors would be looking forward to a better jobless claims this Thursday following last Friday's encouraging jobs report (see Stock Market Calendar). Certainly optimism rules in the market now but are there any hidden risks? Lets look at the technicals.

Technicals
Even though this week's rally has been strong so far, volume has been somewhat lacking. This along with the fact that the Dow is currently in a deep short term overbought condition and that the market is somewhat overdue a significant breather, I would not be surprised to see the market go sideways or pullback slightly from here. However, there are no indications that the overall bull trend is at risk. Such a breather would actually make for better entry points and help the market go further. For now, short term support level is on the 12000 points level with the daily 50MA acting as secondary support at about 11700.

For now, the Dow remains in a short term bull 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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