Stock Market Analysis

Wednesday, March 07, 2012

Oversold Rally...

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

Fundamentals
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.

Technicals
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.

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