Stock Market Analysis

Monday, May 13, 2013

Market Mixed Despite Better Than Expected Numbers

The Dow lost 26 points today despite better than expected economic data.

Fundamentals
Better than expected retail sales figures announced before market opening today failed to offset the effects of the Fed announcing a slow down in its asset purchase program. Market opened lower but found some pockets of strength, allowing it to close mixed with the Nasdaq posting insignificant gain by the end of the day. Looking at the bond yields and the total equities put call ratio revealed the same level of short term indecision and uncertainty. The market might have survived the "Sell in May and Go Away" so far but that has only led it to becoming even more undecided for the short term as investors struggle to find good entry points.

Technicals
Indeed, corrections are actually a good thing for the market as a short and hard correction leads to better entry points that encourage the kind of buying for healthy new highs. The longer a correction is put off, the harder it becomes to invest or trade and the harder the eventually correction will be. From here on, a revisit of the 30MA is definitely in the books next for the Dow but in order for the market to continue upwards in a healthy manner, the intermediate correction needs to happen and it all depends on how well the market holds up at its 30MA.

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

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