Stock Market Analysis

Wednesday, December 28, 2011

Sale Data Beats But Dow Down...

The Dow retreated 139 points today despite continued growth in sales.

Better than expected sales data today failed to overcome continued bad news from the Euro zone. This, along with the fact there is but one more full trading day before the New Year long weekend, caused investors to rush back for the safety of bonds once again, depressing bond yields strongly across the board. However, with the current trend of better than expected economic performance, we could see a very encouraging first quarter of 2012 as long as the Euro doesn't blow up. Yes, it is still a matter of time the Euro mess gets resolved painfully in my opinion.

The Dow retreated today as I have expected on retreating volume as it retests the integrity of the recent breakout. In fact, the Dow could remain around this area for the rest of the week as volume retreats and investors get ready for the new year. It seems like Santa Claus isn't visiting the market this year afterall.

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

Tuesday, December 27, 2011

Final Week of 2011...

Welcome back from the Christmas Holiday!

This is the final week of 2011 and is therefore another holiday shortened week with market closing early on Friday ahead of the New Year. The market is expected to trade with low volume and therefore fairly volatile this week with focus on Tuesday's Consumer Confidence and Thursday's Jobless Claims as well as Chicago PMI. Last week has been a week of great economic numbers, allowing the Dow to make a strong topside breakout of the 12,200 zone. However, the breakout happened on such low volume it is hard to see a strong trend coming out of it unless we see some strong followup this week, which is unlikely to happen on strong volume either. As such, it is still time to be cautious and not to be too enthusiastic on jumping in on the bullish wagon yet.

Thursday, December 22, 2011

Optimism Ahead of Christmas

The Dow closed higher by 61 points today as most economic data today beat consensus.

It was truly a day jammed packed with economic data today. Even though GDP didn't turn out as well as expected, the much better than expected Jobless Claims, Consumer Comfort, Consumer Sentiment and Leading Indicators quickly took the market into the green and held it there for the rest of the day. Today's data continue to paint the picture of economic recovery particularly in the area of jobs and consumerism. Trading volume was also very healthy today, setting the market up for a positive Christmas week.

The Dow is once again at the doorstep of the 12,200 points resistance zone. However, this time round, the Dow has a real chance at breaking the resistance zone at last and that might happen next week.

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

Monday, December 19, 2011

Welcome To Christmas Week!

The Dow retreated 100 points today to a bad start to Christmas week.

Investors sold off today as a wave of pessimism swept across global markets from Asia on uncertainty surrounding the death of North Korean leader. Uncertainties surrounding the stability of the region under the regime of the new young leader caused investors to take to bonds once again. Bond yields declined across the board to recent lows but strangely, options traders seem to be more optimistic today despite the drop, taking total equities put call ratio below par in favor of call options. However, one day of optimistic options trading doesn't mean anything. We can expect the rest of the week to be a low volume, unenthusiastic one ahead of the Christmas holiday.

The Dow made a decisive and dangerous drop below the 30MA and 12,000 support zone today which completed an intermediate term head and shoulders formation. Such a formation puts the odds to downside with immediate support at about 11,600 points. Failing which, we could expect some new lows with intermediate neutral trend turning bearish. Santa Claus really seems to be absent this year...

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

Monday, December 12, 2011

Dow Continues Congestion...

The Dow dropped 162 points today as global markets sold off once again on macro uncertainty.

Investors sold off globally today as results coming out of the Euro summit over the weekend failed to please investors in a big way. Investors rushed back for the safety of bonds, depressing bond yields significantly. Traders also rushed back for put options for the first time in weeks, taking total equities put call ratio above par in favor of put options trading. Indeed, worry in the Eurozone is once again taking over the market with the fading memory of much better than expected US economic data released in the first week. Once again, the market is going to ebb and flow with news from the Eurozone, at least for this week, creating a volatile trading week.

The Dow continued its super congestion between the 12,200 and 12,000 points level today. The Dow has been trading largely within this region for the past 8 sessions with the last 3 sessions touching both the upper and lower limit intraday. Once again, the 12,200 points level proved itself to be an extremely strong resistance level. If the Dow fail at the 12,200 points level once again, it will complete an intermediate double top formation with support at around the 11,200 points area once again.

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

Tuesday, December 06, 2011

Dow Gains Despite Weaker Sales

The Dow closed higher by 52 points today despite poorer than expected sales data.


Sales data turned in largely worse than expected today, putting pressure on a market that has just found some momentum from last week's slew of better than expected data. However, that didn't stop investors from continuing their return back to equities as bond yields continue to rise and options traders continue to trade in favor of call options in a pattern that is predominant during largely bullish markets. All of these continue to give the market a largely optimistic sentiment despite obvious volatility. The next big number to look forward to would be Thursday's Jobless Claims.

The Dow is once again right at the 12,200 points resistance with obvious selling pressure throughout the day, taking the Dow off the 12,200 point level itself. With the Dow in short term overbought condition, we may see yet more struggling around this area before it muster enough energy for a breakout but odds now favor a topside breakout in continuation of the volatile bull trend.

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

Sunday, December 04, 2011

Dow Made 7% Week...

What a week is was last week as US economic data turned in consistently stronger than expected, giving the market a much needed boost. In fact, the Dow made a huge 7% run last week on a week-on-week basis, which is totally phenomenal. This took the Dow once again to the doorway of the 12,200 points resistance zone, which it failed to break last month after multiple testing, in a slightly short term overbought condition. With a quiet week ahead, we might see the market succumb to a bit of selling pressure like we saw last Thursday and Friday before it muster the kind of strength needed for a topside breakout. The Dow looks very much set in a volatile uptrend with huge ups and downs, pushing each peak slowly upwards until perhaps a resolution of the Eurozone issues. Investors definitely ran back into the safety of bonds last Friday, depressing bond yields across the board but trader sentiments continue to be more positive than negative as total equities put call ratio remained below par for 5 straight days, something which we have not seen since the July correction. All in all, I do see a topside breakout coming up, perhaps next week?