Stock Market Analysis

Thursday, April 05, 2012

Dow Sideways Despite Better Data

The Dow moved sideways to, declining marginally by 14 points, despite better than expected economic data.

US market remained weak today despite better than expected jobless claims and the Bloomberg Consumer Comfort Index climbing to the highest level in 4 years. So far, almost all of the major economic data are screaming "ECONOMY IS RECOVERING FOR SURE!" but investors and traders continue to trade largely in a technical fashion especially with geopolitical events putting a shade of grey on global markets. Options traders are especially cautious, keeping total equities put call ratio consistently above 0.9 over the past 3 days, suggesting an uncertain short outlook. Investors may also be concerned with any negative surprise in tomorrow's Jobs Report even though it is inclined to surprise to upside. A negative surprise would definitely be the catalyst for the overdue technical correction investors have been worried about.

The Dow continues to trade sideways, trying to find strength for a topside breakout to new highs. It has also found plenty of support at its 30MA, which is now squeezing the Dow into a congestion between the 13,300 level and its 30MA. With the 30MA still holding as support, the inclination for a breakout continues to be on the upside but lets not forget that even if it does so, the market would very likely go into the overdue intermediate correction perhaps in coincidence with the "sell in May and go away" adage.

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


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