Stock Market Analysis

Monday, December 03, 2012

Dow Down on Dismal ISM Index

Welcome back from the weekend and welcome to the first week of the final month of 2012!

US market took a bit of a setback today as ISM index turned in much worse than expected. However, what's interesting about today's trading action is that it isn't totally pessimistic. In fact, it is more of a very undecided, uncertain trading action. Buying sentiment was strong before the ISM index release and the dismal ISM index didn't cause as big a drop as one would have expected nor did it cause an exodus back to bonds. In fact, bond yields were slightly higher across the board indicating that investors are actually buying into this market. On the other hand, options traders, took total equities put call ratio above 1.1 in a bearish vote in favor of put options. This split opinion resulted in what is at best a sideways day for the Dow as it continued to trade along its 30MA. Looking at just the technicals, the reversal is still healthy and underway but an extended sideways volatile period might be expected before Santa Claus can roll.

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

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