Stock Market Analysis

Thursday, March 31, 2011

Cautiousness Ahead of Tomorrow's Releases

The Dow took a small 30 points loss today in a mixed close as investors get cautious ahead of tomorrow's big economic releases.

Fundamentals
Market was cautious today with lots of trading but very little price movement suggesting that the number of bulls and bears are almost par. Investors are clearly cautious today as economic data today turned in pretty mixed as well, casting doubts on tomorrow's heavy weight jobs report and ISM index (see Stock Market Calendar). The slightly higher than expected jobless claims today kicked the market off to a negative open which was quickly brought back into positive territory by a slightly better than expected Chicago PMI, only to be beaten
back down to negative territory on a much worse than expected Factory orders. These mixed economic data resulted in a cautious, mixed trading day with plenty of buying and selling, closing the Dow and S&P500 marginally lower and the NASDAQ marginally higher. Yes, uncertainty was the theme of the day and tomorrow's economic releases might lead to a profit taking/sell off no matter how they turn out since much of the optimism has already been priced in so far.

Technicals
A big volume day with very little range always spells uncertainty. Indeed, with short term bullish momentum continuing to fade, the market can only go further higher from here for the short term if tomorrow's economic data turns out much stronger than expectation. Otherwise, a healthy profit taking pull back should occur at this level to test the 30MA/50MA (which is pretty much at the same level now) before it can proceed higher in a healthy manner.

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