Stock Market Analysis

Sunday, October 09, 2011

Jobs Report Failed To Bring Back Bulls...

The market continue to be technical drive as the better than expected Jobs report of last Friday once again failed to overcome the powerful 30DMA resistance level.

I was thinking last week that a better than expected Jobs report might be the catalyst for the Dow to stage a topside breakout of its current congestion since it has once again displayed strength at the 200WMA level. Surprisingly, it didn't. The better than expected ISM index didn't turn things around neither did the better than expected Jobs report, both of which are the most heavy weight economic data in the US market.

Indeed, even though investors did return to equities on the news, raising bond yields across the board, traders are not ready for the market to break out to topside yet. Indeed, a topside breakout could mean a reversal of the current intermediate bear trend and I think many traders are not ready for that yet. In fact, total equities put call ratio continue to show a generally bearish sentiment. On the other hand, traders are obviously not ready for a bottomside breakout since there would mean an unprecedented bearish move that might take the market back into a primary bear trend. As such, traders continue to bounce between the 30DMA and the 200WMA, which has now become an extremely narrow channel allowing only for a couple of days move in either direction. With the recovering economic data, I would say odds now favor a topside breakout but the timing of which could be a tricky issue for now. This is also why my Star Trading System have been keeping us out on the sidelines all week last week.

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