Stock Market Analysis

Wednesday, February 15, 2012

Dow Retreats Despite Better Empire State Index

The Dow retreated 97 points today despite better than expected Empire State Index.

Fundamentals
What was an amazing performance on the Empire State Index was overshadowed by a worse than expected Industrial Production, leading to a mixed morning session which was ultimately overshadowed by short term profit taking. Bond yields remained stable with long term bond yields rising as investors take a longer view on equities. Options traders took total equities put call ratio above par in favor of put options trading once again inline with what happened in the market today. Indeed, this is a period of rather good economic data faced with lots of profit taking and resistance and is a period which will require continued better than expected economic data for the rest of the week in order to see a breakout. Good thing is that the trend of economic data seems to be upwards for this period of time so odds are still good for some more upside.

Technicals
The Dow continues to struggle around the 12,800 points resistance zone as its 30MA continues to catch up. Even though the resistance around this area has been significant, strength is significant as well with the breakout candle low holding strongly. It should not be long before a breakout occurs.

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

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