Stock Market Analysis

Monday, March 26, 2012

Investors Cheered on Ben Speech

The Dow gained 160 points today as Fed chairman promises to keep expansionary monetary policy.

Uncle Ben's promise to keep rates low in order to continue encouraging job growth before market open today pleased investors and drove index futures up high leading to a positive opening. Investors have been concerned about the Fed increasing rates after such strong job growth as reflected in the Jobs Reports so far and today's commitment to a low rate truly encouraged the market to come back in a big way. In fact, the SP500 made a new 4 year high today. Strangely though, unlike truly strong market days, bond yields remained relatively stagnant suggesting that investors have yet to reallocate back to equities strongly. Options traders also continued to keep total equities put call ratio above par in favor of put options trading. Would these investors and traders join in the fray over the next few days?

The Dow completed its retest of the 13,000 points + 30MA today as it rebounded off the 30MA line intraday last Friday and resumed the bull trend strongly today, coinciding with the positive commitment from the Fed. It is amazing to see how fundamentals always coincide so nicely with technical setups which is what made me focus on technicals more than fundamentals. So far, the Dow has done everything I said it would to the dot, very classic bull trend behavior and setups. As the quarter ends, investors would once again be concerned about "Selling in May and Run Away" and with the market so overdue another intermediate correction, this could well be the final up leg before the volatility of an intermediate correction hits.

For now, the Dow turns all out bull trend.

Thursday, March 22, 2012

Dow Retreats Despite Better Economic Data

The Dow retreats 78 points despite better than expected economic data.

Both Jobless Claims and Leading Indicators turned in better than expected today, continuing the jobs recovery scenario laid down by this month's better than expected Jobs Report. However, market begun trading in the red and continued in the red throughout the session on lousy showing in the global markets prior to US market opening. Even though it was a negative day in the market, we did not see the kind of all out exodus back into bonds by investors as bond yields only dropped a tad across the board. This is perhaps due to the continued better economic numbers which should lead to better showing in the stock market really soon and investors really don't want to miss out on that. Options traders, however, are more pessimistic as they once again took total equities put call ratio above par in favor of put options trading.

As expected and as mentioned in my email to paid subscribers yesterday, the Dow continued to test the 13,000 points for support. The positive thing at the 13,000 points level now is the fact that the 30MA is also around the area and the Dow is now once again sitting on top of its 30MA, which is a strong short term bullish support, and would have a good chance of rebounding from this area into new highs especially with the Dow now in short term oversold condition after three straight down days.

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

Monday, March 19, 2012

Dow Continues Sideways...

The Dow continued to move sideways today, gaining 6 points in a quiet trading day.

The US market continues to trade in lackluster fashion today in a day without any market moving news. The overall market also received very little boost from Apple's decision to open up its treasuries and pay out dividends following Steve's death. Investors did continue to move back into equities as bond yields rose across the board. Looking at the stock market calendar this week, it seems like the heavy day would be Thursday when we will not only get the weekly jobless claims but also Leading Indicators (see Stock Market Calendar).

No surprise today as the Dow continues to move sideways as I have predicted last week. Indeed, three to five sideways or slightly negative days following huge single day rallies are commonplace as short term traders take profit off the table while investors continue to buy in. With the Dow still in short term overbought condition, we could still see the Dow come down and retest the 13,000 level for support before it has the energy to move upwards steadily for new highs.

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

Tuesday, March 13, 2012

Dow Breaks Out!!

The Dow made the biggest gain of 2012 today, rising 217 points on positive Fed statement.

2012 continues its bullish surprises today as investors jumped back into equities big time on the positive economic outlook in today's Fed announcement. Bond yields jumped upwards across the board as investors rushed out of bonds and into stocks. Options traders also took total equities put call ratio down below 0.9 for the first time in a while. Today also marks the biggest single day gain of 2012 and is especially significant on the technical side of the story. 2012 has been about the US economic recovery so far and to support today's Fed statement, all sales indicators also turned in positive as consumerism picks up in the States.


As I have expected two days ago in my comment that "the Dow now has a real chance at breaking the 13,000 points level", the Dow made a decisive breakout today, climbing back up to the early 2008 levels! Today's breakout would form the support needed for the Dow to continue this incredible bull trend even though it has also taken the Dow into short term overbought condition and it would not be surprising to see a few sideways or slightly negative days from tomorrow onwards as investors and traders take short term profit off the table. Also, a retest of the 13,000 points level would also be possible in order for the market to solidify the 13,000 points level as its new support level. For now, my stock options picks subscribers and me are totally enjoying the profits especially on our existing trade in ROK which is now up 50%! Check out my Master's Stock Options Picks service now!

For now, the Dow turned all out bull trend.

Sunday, March 11, 2012

Lackluster Trading...

The Dow moved sideways, gaining 14 points today in a quiet day without any major economic release.

Investors bought into the encouraging jobs report last Friday but buying remains somewhat lackluster as investors continue to be cautious. Bond yields remained relatively unchanged as investors are reluctant to move back to equities in a big way. Total equities put call ratio continue to linger in the 9.0 to 1 range as options traders continue to be uncertain as well. Indeed, this is yet another period of uncertainty due to uncertainties surrounding the Syrian issue. However, it is expected that whatever effect the Syrian issue may have on the market will be short term. Over the longer term, the US recovery scenario remains intact.

The Dow has successfully climbed back above its 30MA since my last post and will now challenge the 13,000 points resistance level. It is going to be a hard level to break but with the Dow now short term oversold, along with a nice 30MA retest continuation pattern, the Dow now has a real chance at breaking the 13,000 points level.

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

Wednesday, March 07, 2012

Oversold Rally...

The Dow gained 78 points today on bargain hunting and encouraging jobs indicator.

The Dow took back some lost grounds today as bargain hunters reallocate back into equities. Bond yields rose as investors once again returned to equities. Total equities put call ratio is lower but is still lingering around par which continues to suggest short term uncertainty by the options traders. This Friday's jobs report may be the catalyst the market needed to stage a breakout for further highs.

Since my last post, the Dow has done everything I expected it to do... linger around the 13,000 points level despite better economic data and then retreat to the 30MA or 50MA level before it can muster enough strength for a breakout. The Dow is currently short term oversold, finding support around the 30MA level, which is extremely encouraging. We need to see the Dow get back above the 30MA before we can validate this support. For now, the market remains at danger of revisiting and testing the 50MA level as this is that overdue intermediate correction I have been talking about.

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