Stock Market Analysis

Monday, February 27, 2012

13,000 Points Yet Unbreakable...

The Dow went sideways today, closing marginally lower by 1 point as better than expected economic data brought the market back up from a red morning session.

Fundamentals
Weakness in European market led to a negative opening session this morning but was rescued by better than expected Pending Home Sales and Dallas Fed. Economic data continue to pour in better than expected recently, providing the support the market needs to move further. This is the first week of March 2012 and of course we would be getting the two super heavyweight economic data; ISM Index and Jobs Report. Better than expected performance on these two numbers would certainly help the market break out of the current stalemate. Investors rushed back for the safety of bonds today, depressing bond yields while options traders continue to keep total equities put call ratio close to par as uncertainty continues in the market.

Technicals
The Dow is currently up against an extremely strong 13,000 points psychological resistance level. The Dow usually makes a significant retreat to perhaps the 50MA level in the face of such strong resistance before it has enough energy to stage a breakout. In fact, we could see such a retreat occur even with better than expected data over the next few days.

For now, the Dow remains in all out bull trend.

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