Stock Market Analysis

Tuesday, October 11, 2011

Uncertainty Continues...

The Dow moved sideways today, closing marginally lower by 16 points on mixed sales data.

Fundamentals
US market opened marginally lower today and then bounced up and down around the breakeven line as investors continue to be undecided after an extremely strong holiday Monday rally. Sales data today didn't help maintain the optimism as they turned in largely mixed. Even though investors are still returning to equities from bonds, raising bond yields across the board, traders are less optimistic and pushed total equities put call ratio higher in favor of put options trading. Indeed, it is an extremely undecided market now. On the one hand, we have recovering economic data but on the other hand, investors know that the unresolved debt issue Europe side could hit the market anytime like a time bomb. In fact, investors/traders don't seem to be returning from the holiday yet as trading volume continue to drop today. Yes, volume has been dropping since day one of this "rally" so far and I would be careful in being too optimistic with it.

Technicals
Dropping volume, declining short term bullish momentum, rising put call ratio; None of these sound right for a "bullish breakout". We should see a retest of the 30DMA soon...

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

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