Stock Market Analysis

Thursday, March 07, 2013

Dow Powers Forward

US market continued to power forward with the Dow closing higher by yet another 33 points into uncharted territory.

Fundamentals
US market continue to push new historical highs today with the Dow closing in at 14,329 points despite lackluster economic data. Economic data failed to impress today so most of the buying seems to be technical based as investors and traders jump in on the new high. Indeed, most people start buying only when new highs are made, which of course is very often too late. This is why my Star Trading System is designed to jump in early in a new trend or even slightly before a new trend. Bond yields continue to rise across the board as investors return to equities and options traders also started to keep total equities put call ratio below 0.9 in a decisive bullish vote for a second day in a row. Everything so far suggests that this bull trend is sustainable despite the sequestration.

Technicals
The Dow pushes deeper into short term overbought territory today with no definitive sign of a pullback yet. In fact, the Dow is quite fond of trading in overbought territory for a week more than I expect after breaking significant resistance levels, before it go sideways or pullback slightly to digest some of those overbought sentiment. So far, it seems like this rally could still go on for a few days more before some short term profit taking set in.

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

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