Stock Market Analysis

Thursday, March 17, 2011

Bargin Hunters Step In

The Dow gains 161 points today as bargain hunters stepped into the beaten down market.

Fundamentals
Even though Asia closed red across the board today, the US market was ready to open much higher as index futures pointed higher way before market opening.
This happened even before the better than expected Jobless Claims and Philley Fed are announced, making today's move look more like bargain hunting. The
nuclear situation in Japan and the Libyan Crisis is still far from over and there is really no credible stimulus to explain today's seeming bullishness, as such,
caution is advised. Tomorrow's Quadruple Witching will see a spike in market volatility
and might even lead to some selloff as investors take a defensive stance ahead of an extremely uncertain weekend.

Technicals
Even though the Dow made a strong day today, it merely traded within the trading range of yesterday's drop which makes it more of a sideways day than a bullish one.
In fact, this looks like one of those bull traps that every bear trend contains and I would be cautious with interpreting it too positively. Bear momentum
continues to rise on our short term momentum indicators even though the market closed upwards today and total equities put call ratio continue to incline
towards put options trading.

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