Stock Market Analysis

Thursday, April 14, 2011

Jobless Claims Disappoints

The Dow continued to move sideways today, closing marginally higher by 14 points despite disappointing jobless claims.

Jobless claims disappointed investors today turning in 412K versus 385K last week. This sudden surge in jobless claims also turned its 4 weeks moving average upwards, resulting in the market opening deep in the red. However, today's market action is also largely technical in nature as bargain hunters zipped into the weakness and lifted the market back up to breakeven by the end of the day. This could also reflect investors' optimistic expectations for tomorrow's Empire State Index being a leading indicator for the ISM index.

Indeed, today's market action is largely technical driven as traders zipped in right when the Dow touched its 30/50MA line (which is right about the same level now), bouncing the Dow right off the line in an impressively bullish move. As I have mentioned before, the Dow needs to retest the 30/50MA line before it can make new highs in a healthy manner and today's intraday testing of the level and successful rebound off it seems to tell that story. However, as traders, lets wait for at least one good up candle before coming to this conclusion. If for any reasons (and there are plenty of fundamental reasons for that as well from developments in the Japanese nuclear crisis to the apparently short term worsening economic data) the Dow ditches tomorrow and breaches the 30/50MA, the big double top formation would still be formed for possibly more lows.

For now, the Dow turns a short term neutral trend, intermediate bull trend and primary bull trend.
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