Stock Market Analysis

Thursday, September 06, 2012

Dow Rallies On Strong Jobless Claims

The Dow made an explosive 244 points gain on better than expected jobless claims.

Fundamentals
Jobless claims made a surprising dip this week, turning in at 365K versus last week's 377K. This is lower than the consensus of 370K and definitely cast a positive light ahead of tomorrow's Jobs Report. In fact, as I mentioned two days ago, investors have already started buying since two days ago as if they knew something positive is going to happen, remember? This might be it. However, the reaction to today's number is so strong that it has probably priced in much of the optimistic outcome of tomorrow's Jobs Report and might lead to some profit taking no matter how positive Jobs Report really turn out to be.

Technicals
The Dow rallied from beneath its 30MA just like I predicted it to two days ago. Indeed, as I mentioned, the volatile bull pattern so far is a strong one with no indications to the contrary. Technicals and Fundamentals tied in very nicely once again in the continuation of this pattern. As I've always said, a few days of profit taking is to be expected following such strong single day rallies no matter what the fundamentals say. So expect a few sideways or slightly negative days to follow.

For now, the Dow turns an all out bull trend.

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