Stock Market Analysis

Tuesday, November 22, 2011

GDP Disappoints...

The Dow sunk by 53 points today as economic data turned in largely negative.

Fundamentals
US market was hit by a downwards Q3P GDP along with slower sales ahead of the discount week. Bargain hunting in the morning that brought the Dow back into the green took a hit on the FOMC minutes in the after which reinstated higher downside risk due to the European debt issue. Indeed, the European debt issue is an axe hanging over global markets right now and is an issue that almost every economists and financiers think will end with the desolution of the Euro. Investors certainly are cautious ahead of the Thanksgiving holiday, running back for the safety of bonds. Yes, Santa-Claus has failed to come so far. What the world needs is a quick resolution of the Euro issue so that repairs can start in the world markets rather than a prolonged agony that will almost certainly end up the same way. So, will a resolution of the Euro issue result in a global crisis? Well, I personally think the effect globally will be sharp and quick with prolonged effect mostly on the Euro side. However, no matter what happens, as a trader, I will continue to read the market and trade for profit no matter upwards or downwards... as long as it goes somewhere.

Technicals
It is a good thing that the Dow closed within yesterday's trading range otherwise I would have to put the 11,600 support area into question. For now, it is yet significant enough to call it a downside break. What the Dow does tomorrow will be very critical... will the support level hold?

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

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