Stock Market Analysis

Wednesday, March 27, 2013

Dow Continues Sideways Ahead of GDP

The Dow closed lower by 33 points today as investors took profit off yesterday's rally.

Fundamentals
Major equities markets closed negative today ahead of US market opening due to Eurozone issues, leading to a deep negative opening. Bargain hunting set in almost immediately, taking the market off its low throughout the day and even closed the Nasdaq Composite positive. Investors and traders were obviously cautious also ahead of tomorrow's Jobless Claims and GDP, both of which are capable of moving the market. With this much profit in the pocket so far this year, the fear of a bad number definitely outweigh the desire for a good one. As such, bond yields were depressed across the board as investors rushed for the safety of bonds and options traders took the total equities put call ratio above 0.9 once again, suggesting uncertainty. In fact, major index futures are already pointing downwards right now as we speak. So, how will the final trading day ahead of Good Friday fare?

Technicals
No surprise today as the Dow continued its largely sideways movement. It would be a pattern break if today was a strong positive day but it wasn't. Even though the Dow is now off short term overbought condition, it is still some distance from its 30MA. As such, chances are that tomorrow continues to be a sideways day or even a significant down day in order to draw in some distance to the 30MA. We should see one final, albeit short, leg up after this before an intermediate correction hits.

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

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