Stock Market Analysis

Tuesday, June 11, 2013

Start Of Intermediate Correction?

The Dow took a 116 points hit today as sales data disappoints.

Fundamentals
The US market has amazingly bucked every single disappointing heavyweight economic data over the past month so far but is at last showing some real cracks at last. The disappointment in the sales data managed to dent the market right off the gate but amazingly, bargain hunting stepped in almost immediately once again, bringing the Dow back into the black briefly towards midday. However, this time round, bargain hunters failed to buck the economic data once again as buying succumbed to selling for the rest of the day. Options traders continue to keep total equities put call ratio in the uncertain range like they did since 4 June and investors depressed long term bond yields as they returned to the safety of bonds.

Technicals
Once again, everything points towards the long awaited intermediate correction. This is also the first time the Dow has failed twice at the 30MA this year so far. However, the Dow has bucked the technicals everytime over the past few months so I am going to be cautious with calling this the start of the intermediate correction. The buying we saw early today and the post market index futures pointing sharply upwards also suggest the existence of significant bargain hunting which could potentially turn things around if they get their way tomorrow. As such, I will want to see the Dow break the June 6 low before calling this the start of the intermediate correction.

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

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