Stock Market Analysis

Monday, March 31, 2014

End of Q1 2014

The last trading day of Q1 2014 ended well with the Dow gaining 134 points today, ending the first quarter of 2014 on a positive note exactly how I have predicted it at the start of the year. Overall, the Dow gained 1.68% in the first quarter of 2014 or an annualized 6.7%, which is a very healthy bull trend. However, will the US market really gain 6+% by the end of the year? I am skeptical. As I mentioned at the start of the year, I expect the US market to be in a volatile bull trend all throughout the first to third quarter with the fourth quarter looking to be more uncertain. In fact, I am of the opinion that we could see an extremely significant correction by the fourth quarter due to the business cycle and the Hindenburg Omen.

Looking more closely, today's "Bull Day" seems to be a little doubtful as it was slightly overdone on no significantly bullish economic data or news. Bond yields and put call ratio both didn't display the kind of behavior that a truly bullish day in the stock market produces. As such, I would be careful to call this the start of another very strong leg upwards. Doesn't mean it cannot but that this simply isn't the time to jump in long too strongly without further evidence.

Wednesday, March 19, 2014

Strangely Bullish Bearish-Day

The Dow dropped 114 points today after the Fed's hawkish announcement of a pending rate hike after 2pm.

We all know it is going to happen but every time the Fed talks about it, investors punish the market for it. However, we also know one thing for sure, rate hikes during a period of "Confirmed" growth and market strength is actually a good thing and keep the economy and the market growing. In fact, today's "Bearish Day" isn't as bearish as it could be when we take a look behind the curtains.

Bond yields rose across the board as investors returned to equities late in the afternoon, taking the market off its intraday low, the VXO actually dropped instead of rise and total equities put call ratio continued to remain below 0.9 in favor of call options trading. All of these tells me that today's "bearish day" isn't truly bearish but rather a one day kind of thing and looks more like a bullish continuation pattern when taking the overall market's rebound from 30MA within the framework of an intermediate bull trend into consideration. In fact, that didn't stop my Master's Stock Options Picks Subscribers from taking a 20% profit on PSX call options today.