Stock Market Analysis

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.

Fundamentals
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...

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.

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