Stock Market Analysis

Thursday, November 29, 2012

Dow Gains Despite Missing Expectations

The Dow gained 36 points today despite economic data missing expectations.

US market closed higher today despite both GDP and Jobless Claims missing estimates. GDP turned in 2.7% versus estimates of 2.8% and Jobless Claims turned in 393K versus estimates of 390K. However, the good news is that both numbers are vastly better than their previous numbers and that could be the catalyst for the higher close. Even though it was a higher close, it wasn't a particularly optimistic trading day. In fact, there were plenty of intraday ups and downs in what is more appropriately an uncertain trading day. There also wasn't the usual reallocation back into equities from bonds and options traders even took total equities put call ratio back up to par indicating general uncertainty. Indeed, the market is currently extremely undecided with the fiscal cliff looming ahead with the general sense that the market is short term overbought.

Today's indeed a positive day with lots of uncertainty. The Dow continues to struggle around its 30MA and if the current trend is a full repeat of the May to June pattern, then we should see an extended period of volatile sideways struggle before the bulls can resume.

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

Tuesday, November 27, 2012

Dow Retreats... As Expected...

The Dow retreated 89 points as expected from its 30MA despite better than expected economic data.

Today's a day of great economic data as sales data turned in better than expected due to Black Friday sales. Durable goods orders also beat expectations as well. However, these data only result in a small early morning slew of bargain hunting, bringing the market into the black before profit takers continue their short term selloff. Bond yields dropped slightly across the board echoing the selloff today. However, options traders continued to keep total equities put call ratio below 0.9 for a second straight day today, suggesting a bullish undercurrent brewing up secretly in the background now.

No surprises today as the Dow retreats from its 30MA as expected. The persistently lower total equities put call ratio conforms with my view that the intermediate correction has ended and we are witnessing now the reversal back into a bull trend with a bit of resistance around the 30MA. This is classic reversal pattern taking place, hence the predictability. This pullback would be a shallow one and we should see a retest of the 30MA within the week.

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

Sunday, November 25, 2012

Dow at Resistance...

Welcome back from the Thanksgiving Holiday!

I hope all of you had a good long break and that all my American readers had fun shopping during Black Friday (and Thursday!). The Dow also turned around EXACTLY where I predicted it to, starting the new santa claus rally that should last us through to 2013. Santa Claus rally is a noted year end anomaly that results in a rally that typically starts around December and lasts through January of the following year.

The Dow is now up against its 30MA resistance level and is also short term bought overbought. As such, expect to see a bit of a retreat from this point before the Dow can muster enough energy to breakout above the 30MA and reverse the trend into a bull trend.

Monday, November 19, 2012

Intermediate Correction Ends...

Welcome to Thanksgiving Week!

This is going to be a holiday shortened week with the Thanksgiving holiday on Thursday and a half day, low volume, market day on Friday. Here's wishing our American readers, happy holiday!

The Dow turned around decisively and completes a reversal with a 207 points rally after touching the 12,500 points level intraday last Thursday and Friday, exactly how I said it will. The 12,500 points level proved to be the final support level of this intermediate correction indeed, allowing my stock options picks subscribers and me to take our 6th straight put options win on OVTI today, effectively closing off all our bearish position of this intermediate correction. I would definitely start to spot good bullish trades from this point forward. (my subscribers are going crazy over the wins! Check out my Master's Stock Options Picks service now!)

This turnaround could also spark the start of what is known as a "Santa Claus" rally, which is a year end rally that happens most of the years. So, is Santa Claus coming to town this year?

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

Wednesday, November 14, 2012

Dow Down on Retail Sales...

The Dow slided 185 points today on worse than expected retail sales.

US market opened slightly positive only to succumb almost immediately to a sell off on the worse than expected retail sales, probably due to Hurricane Sandy (most people think the pre-Sandy buying rush ought to actually increase retail sales for the month as people stock up more than usual). The market took another steep hit right after the FOMC minutes release at 2pm as the Feds displayed nothing but helplessness in the face of the current situation.What's interesting about today's big drop is that it is not accompanied by the big drop in bond yields that we expect to see in a really bearish day as investors rush back to bonds. Interestingly, bond yields remained almost the same, suggesting that investors may not be as bearish as it looks and that today's drop might be the result of the final bearish herd waiting to be slaughtered. The huge surge in total equities put call ratio from 0.8s to 1.1s also indicate that the move might be excessive and that we should see some accumulation over the next couple of days.

The Dow continued its journey towards the 12,500 points final support level as expected. The closer it gets to that level, the more dangerous it becomes to putting on new bearish trades. I would definitely be taking this opportunity to find good selling points for my bearish trades and good entry points for new bullish trades. In fact, we just took over 70% profit on FL's put options recently (check out my stock options picks service!) Indeed, I do not think that the market is decaying back into a primary bear trend and that this is merely a classic intermediate correction within the framework of a new primary bull trend coming out of the 2008 crash (which is a real primary bear trend). I won't be surprised to already see strong indication of bargain hunting over the rest of the week.

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

Monday, November 12, 2012

Happy Veteran's Day

Happy Veteran's Day! This is the day Americans remember those that has fought for their nation and even though it is still a market day, most Americans are actually on holiday, leading to an extremely low volume and sideways day.

The Dow continued sideways today, closing marginally lower by 0.31 points. As long as economic data persist in its recent trend of recovery, we should not see the market go lower than 12,500 and turn into a primary bear trend or even reverse the primary trend into a neutral one.

Thursday, November 08, 2012

Intermediate Correction Continues Despite Better Economic Data

The Dow continued its intermediate correction today, dropping 121 points despite better than expected economic data.

In continuation of the largely technical driven correction, US market continued its drop despite better than expected Jobless Claims and shrinking of the trade deficit on a rebound in exports. These are definitely great economic reports which continues the recent, albeit controversial, trend of improving economic data. However, whenever the market corrections strongly into recovering economic data, the rebound back into bull trend would always be a strong one. So, is the market ready to rebound yet? Lets take a look at the technicals...

The market is still decidedly bearish right now, continuing the intermediate correction without regards to economic data. The fact that the Dow is down again significantly after Wednesday's strong down day with bond yields and total equities put call ratio supporting the move shows that this intermediate correction may be heading for the 12,500 points final support level that I mentioned to paid subscribers yesterday. The good thing was that our pre-positioned bearish put options trades continues to be profitable with the market moving in our favor with positions making as much as 75% profit right now (check out my Stock Options Picks Service now, don't miss out!). Like I told paid subscribers yesterday, I don't expect this intermediate correction to turn into a real bear trend so 12,500 points should hold up as the final support level around which we should be buying into weakness for the resuming of the bull trend.

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

Tuesday, November 06, 2012

Voting Day!

Its election night! The excitement's in the air and I am following it closely as well, so, I am going to make this quick and short.

The market rallied against worse than expected sales data today as voting day creates a sense of excitement and optimism. We all know what such "rallies" mean within the context of an intermediate correction, right? Yes, big big profit taking tomorrow no matter who wins, no questions about it. This could drive the market down tomorrow for the real bottom at about 12,900 points over the course of the week. Hope you are prepositioned for this just like my stock options picks subscribers are.

Monday, November 05, 2012

Final Leg Down Coming Up...

The Dow moved sideways today, closing marginally higher by 19 points following last Friday's big down day.

If you have been following my blog long enough, you'll know that every big up day or big down day would most probably be followed by a few sideways or slightly opposite days. This is what happened today. US market took a hit last Friday just as I have predicted last Thursday. Indeed, big single day rallies within an intermediate correction are very dangerous signals and a small top candle following a big down day within an intermediate correction tend is equally so. Such a signal usually lead to that final down day within the intermediate correction before a bottom is reached. Yes, we could see that final leg down as soon as tomorrow so let's get ready to take profit on our put options trades!

(In fact, I just took 45.4% profit on PWE put options today... check it out)

Thursday, November 01, 2012

Economic Data Pleases...

The Dow gained an impressive 136 points this second day of post-Sandy trading on much better than expected economic data.

Jobless claims and ISM index both turned in much better than expected today, spurring strong buying right off the gates. Jobless claims made an impressive ditch while ISM made a second higher month in a row this month, creating a positive mood ahead of tomorrow's all-important jobs report. Could this month's jobs report beat last month's controversial report? Well, at least most options traders are a little skeptical as they once again bring total equities put call ratio upwards above 0.9, which suggests uncertainty. Such a move on a strong up day does cast a shadow of doubt on the move so we might even see some strong profit taking tomorrow no matter how the jobs report turns out (especially so when most traders now think the jobs report is manipulated for presidential election purpose).

Like I always teach my students, one strong up day or one strong down day doesn't mean anything. In fact, it could setup a much stronger move in the original direction. In fact, such single day rallies in an intermediate correction typically sets up for the final leg down before the real bottom is reached and I think most options traders think the same way, resulting in the rising of the total equities put call ratio today. I would need alot more evidence before calling this a bottom and going on the bullish trades.

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