Stock Market Analysis

Tuesday, May 03, 2011

First Osama-Free Day

The Dow continued to move sideways today on mixed retail data, closing absolutely +0%.

Fundamentals
Today's the first Osama-free day but that doesn't seem to be doing much for the stock market. In fact, investors continue to be extremely cautious ahead of possible reprisal from dead Osama's organisation. This, along with the "Sell in May and Go Away" sentiment that is going on, caused bond yields to continue dropping across the board as investors reallocate back into the safety of bonds. Today's mixed retail data also serve to fuel such a rush for safety. However, even though investors have been moving strongly back into bonds recently, the market doesn't seem to have taken a hit at all as traders and the herd continue to take over strongly. In fact, investors are likely going to be conservative all week ahead of the Jobs report which could also turn out worse than expected with the current short term trend of volatile economic data going on. Yes, like stock prices, economic data also move in waves rather than straight upwards or downwards. It is going to be a volatile ride whole week long.

Technicals
The Dow continued to move sideways as we have expected and as I mentioned to paid subscribers yesterday, the Dow is likely not only to move sideways but perhaps also make a short term pullback to its short term support level at about 12,400 before it can move further up healthily. The market is still short term overextended so lets not fall for the bear trap.

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