Stock Market Analysis

Thursday, June 09, 2011

Jobless Claims Disappoints... Again

The Dow gained 75 points today despite once again worse than expected Jobless Claims.

Fundamentals
Jobless claims disappointed once again this week. This week, not only did it not meet analysts' expectation of a lower number than last week, it turned in even higher once again. This along with this month's Jobs report truly cast a shadow on the job market in the US and the coming Jobs report next month as well. Even though Jobless Claims was this disappointing, the market still rallied on bargain hunting without any significant positive headline. Some investors moved back into equities on the bargain from the very low bond yields, resulting in a small rise in bond yields across the board.

Technicals
The Dow did exactly what I said it will in the paid subscribers' emails yesterday. With the Dow entering a deep oversold condition, a rebound is expected before the Dow could go any lower. Yes, a bull trap. Every strong intermediate corrections are marked by a few of these tempting "reversal points" which do nothing but trap the bulls in their position when the bear trend resumes. This is what a bull trap mean. With the market pulling back from its high today by the end of the day, it seems like there are plenty of people willing to sell into this strength especially with fundamentals favoring to downside. Today's action has yet to bring the Dow back from its deep short term oversold condition, as such, some herd could still be buying into this "strength" tomorrow before reality take over and bring the Dow down to where it should... the 200MA.

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