Stock Market Analysis

Monday, September 24, 2012

Dow Sideways As Expected

Welcome back from the weekend!

No surprises today as the Dow continues its sideways movement, closing slightly negative by 20 points. Like I said last Thursday, the Dow is most likely going to continue sideways into this week and even revisit its 30MA before it can muster enough energy to move upwards somemore. This mustering of energy usually comes in one of two ways; Retreating to the 30MA or moving sideways until the 30MA catches up. Economic numbers continue to be largely mixed with a touch of disappointment, adding possibility to the retreat to the 30MA. This is compounded by the fact that some investors are returning to the safety of bonds as we can see from the selloff towards the end of the day as well as the dip in the longer term bond yields. Options traders continue to suggest a general bull trend by keeping total equities put call ratio below 0.9, something which I agree with.

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

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