Stock Market Analysis

Tuesday, November 27, 2012

Dow Retreats... As Expected...

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

Fundamentals
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.

Technicals
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.

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