Stock Market Analysis

Monday, April 16, 2012

Mixed Day On Deteriorating Empire State Index

The Dow closed higher by 71 points while the Nasdaq closed down by 22 in a mixed trading day as Empire State Index deteriorates.

Fundamentals
Market cheered to the higher than expected retail sales figure released before market open only to be immediately greeted by selling into the strength the moment market opens due to the poorer than expected Empire State Index released at the same time. The Nasdaq composite was taken all the way down into the red and never recovered while the Dow and the SP500 did find some strength and remained positive through closing, resulting in a mixed day. It seems like the bulls and bears are somewhat equally matched today with bond yields declining only by a touch across the board. Total equities put call ratio continue to be within the 0.9 to 1.1 range, suggesting a largely uncertain market. Indeed, there are many forces at work as May draws nearer, both fundamental and technical and I would say that technicals have been dominating due to the fact that investors and traders alike are expecting some kind of significant correction ahead of May.

Technicals
The Dow continues to crawl along dangerously below the 30MA line and such hesitation to get back on top has led to significant corrections in the past when the bulls start to lose heart. This is especially so when it is now so close to May and investors looking set to take profit on the profits for the strong year so far. I would be watching the April 10 low of 12,700 as a breach of this level would confirm this as the intermediate correction that I have been talking about for so long.

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

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