Stock Market Analysis

Wednesday, January 16, 2013

Dow Slows Down...

Nothing much happened as the Dow continued bouncing around the 13,500 points level amidst uninspiring economic data.

Economic data is obviously going through yet another period of volatility right now. Like stocks, economic data moves in trends and has period of volatility as well. These periods of volatility usually give the background story for short term pullbacks within a bull trend, which is what we are looking at right now.

The market is short term overbought and needs a short retreat in order to muster enough energy to breakout of the 13,600 points resistance level and the economic numbers seem to be helping it do just that. In fact, with the market this overbought, we might not see any strong positive move even if tomorrow's economic data surprises to upside. In fact, I would expect to see some volatility in tomorrow's jobless claims, housing start or Philley Fed that will actually facilitate this retreat. Investors are already going back into longer term bonds for some safety ahead of tomorrow's numbers, depressing longer term bond yields slightly.

For now, the Dow remains in all out bull trend.


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