Stock Market Analysis

Tuesday, November 05, 2013

Dow makes Triple Top

The Dow ended down 20 points today amidst mixed economic data.

Fundamentals
US market started out deep in the red from slightly disappointing sales data and the general sense that the market is overbought. However, sentiments took an about turn at 10am with the release of better than expected ISM services which brought the Nasdaq composite into the black and the Dow near par for the day. Bond yields were up as investors rushed back to equities on the data as the market continues to rise against all odds. Earnings season has also been quite pleasing so far, lifting the market overall with stocks posting amazing leaps on many releases. Yes, despite all the problems in the policy side, the economy and the stock market seems to be unaffected and the economic recovery environment still looks very much intact.

Technicals
The more the market go against all odds, the more investors and traders trade with caution. The Dow in particular formed a disturbing triple top formation. The three consecutive tops make this pattern visually similar to the head and shoulders pattern but, in this case, the middle peak is nearly equal to the other peaks rather than being higher. This formation usually precedes an extremely significant drawdown beating the base set by all three peaks, in this case, seems like a trip down to 14,500. This pattern will be confirmed if the Dow test and breaks the 30MA. However, that didn't stop our Master's Stock Options Picks subscribers from making impressive gains this week... check it out at http://www.mastersoequity.com/MOE_latest_win.htm .

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

0 Comments:

Post a Comment

Links to this post:

Create a Link

<< Home