Daily US Stock Market Fundamental & Technical Analysis

US Sales Data Disappoints...

2012-01-24T18:33:00.000-08:00

The Dow closed slightly negative today by 33 points as sales data disappoints.

Fundamentals
Sales data today turned in worse than expected, resulting in a deep red opening. However, the general sense of optimism in the market continues as investors and traders stepped in almost immediate and took the market off its lows. In fact, the NASDAQ Composite managed to get back into positive territory. This proves that the general sense of optimism in the market is strong enough to hold off or overcome bad news in the market which would otherwise have resulted in a significant down day in a generally pessimistic market. The rest of the week is littered with important economic releases such as Wednesday's FOMC Announcement, Thursday's jobless claims and Leading indicators as well as Friday's GDP. It can be expected that a worse than expected showing would have limited impact on this generally optimistic market while a better than expected number would provide the catalyst needed for the bull market to continue.

Technicals
It is interest to see again and again how fundamentals coincide and support technical predictions. This time round, the disappointment in the sales data coincided with the 12,800 points resistance zone which I have been talking about over the past few days. We could see a breakout over the next few days if economic data continues to do well. However, this up leg is looking more and more overextended and I expect a significant testing of support level (perhaps the 30MA or 50MA, nothing too deep) should a breakout happen over the next few days.

For now, the Dow remains in short term, intermediate term and primary bull trend.

Happy Chinese New Year!!!

2012-01-22T17:54:00.000-08:00

HAPPY CHINESE NEW YEAR OF THE DRAGON!
It is Chinese New Year today, signifying the beginning of the Chinese year of the Dragon. Here's wishing all of my Chinese readers all over the world a very happy and prosperous Year of the Dragon! Gong Hei Fatt Choy!

Unlike western mythology, dragons are not symbols of evil in Chinese culture but rather symbols of good fortune and prosperity. So, is the year of the dragon going to usher in a prosperous bull market? Well, at least so far, 2012 is shaping up to be quite encouraging. The overall recovery pattern that started back in 2009's bottom pivot is completed with a successful intermediate retreat and continuation in 2011. There is no doubt now that the market is in recovery mode even though if you only realized it now, you would have missed a bunch of profit already.

The January Effect, also known as Capricorn Effect, seems to be back in the market this year as the Dow gains a nice 2.4% last week as economic data continues to be largely better than expected. The Dow has gained a total of 4.1% this month so far and it is now up against the 12,800 points resistance level. This was the very level which resulted in the nice double top formation leading to last July's intermediate correction. With the Dow in short term and mid term overbought condition, I would expect some struggle around this area before a committed breakout and continuation of the bull market. In fact, the Dow could retest its 30MA before mustering enough energy for a real breakout.

Overall, I am bullish on the year of the Dragon and will certainly be re-opening my managed account service so that I can help more people make more money this year! Those of you who wish to be on the priority queue for this service, please email me at founder@mastersoequity.com . Let's make the year of the Dragon the most prosperous one ever!

Dow Gains Despite Poor Philley Fed

2012-01-19T18:04:00.000-08:00

The Dow gained 45 points in a rocky trading day on poorer than expected Philley Fed.

Fundamentals
US market opened positive today on better than expected Jobless Claims data before being mercilessly slaughtered by a poorer than expected Philley Fed released at 10am. However, the general sense of optimism in the market overcame the short sell-off, leading to a rocky but steady climb. Investors continued to return to equities, http://www.blogger.com/img/blank.giflifting bond yields across the board. Option traders also continued to trade in favor of call options, depressing total equities put call ratio. It is clear that the general sentiment in the market is a bullish one in which positive news have greater lifting effects than the depressing effects of negative news.

Technicals
The Dow continued to climb steadily on a steadily rising 30MA. This is an extremely healthy climb with some volatility expected around the 12,800 points resistance level. Tomorrow is options expiration day for January options and will no doubt be a slightly volatile day.

For now, the Dow remains in short term, intermediate term and primary bull trend.

Empire State Index Beats...

2012-01-17T16:53:00.000-08:00

The Dow gained 60 points today spurred by global optimism and better than expected economic data.

Fundamentals
A wave of global optimism swept across the global before US market opening, lifting index futures. The optimism was then supported by a better than expected Empire State Index before US market opening, leading to a strong morning session before short term profit takers stepped in in the afternoon. It could be a pretty rough week ahead going by the way investors are going back into bonds and the VIX rising in a supposedly strong day. As such, I won't be surprised to see a few negative days going forward.

Technicals
The Dow has been climbing steadily so far and seems due for a little pullback and a retest of the 30MA or the 12,200 level for support before the market can move on higher safely. There is nothing in the cards that suggest that such a pullback might lead to something uglier, as such, it could make a good accumulation point when it happens.

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

Dow Crawls Along...

2012-01-11T18:13:00.000-08:00

The Dow continued sideways today, closing marginally lower by 13 points in a mixed trading day.

Fundamentals
Global investors were hit with sanction threats from Iran which could affect one fifth of global oil supply, something which will raise oil prices and put pressure on equities. Investors struggled against the general sense of optimism in the market against the news and managed to close the day close to par. Investors rushed back for the safety of bonds today, depressing bond yields across the board strongly but traders seem to be more optimistic as they accumulated into the exodus, providing strength to return to breakeven throughout the day. Options traders also continued to keep total equities put call ratio significantly below par in favor of call options trading. All in all, the general sense of optimism in the market seems to be holding up against bad news globally so far and we should see a run at the very next good news, perhaps a surprise in Thursday's economic numbers.

Technicals
Even though the Dow made nothing more than a sideways day today, it did attempt to continue the bull run yesterday, which is a very good sign under a total lack of catalyst. I would just need one good continuation run to turn the intermediate trend back to bullish. So far, the bull run over the past few weeks has been slow and steady and that's the way to go.

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

Totally Sideways...

2012-01-09T17:03:00.000-08:00

The Dow struggled a gain of 32 points as the market continue to go sideways after last week's huge gain.

Fundamentals
There were no economic data or news driving the market today, resulting in a lackluster trading day. Bond yields and total equities put call ratio remained largely unchanged as sentiments remained unchanged from last Friday, which is always a good thing on Monday. Tomorrow's sales data may well provide the catalyst needed for the market to continue, upwards.

Technicals
The Dow continued to move sideways today as I have expected following last week's single day rally. Almost all big up days are followed with a few days (or up to a week) of sideways or slightly negative trading as traders take short term profit. The Dow still needs to find strong support around the 12,200 area in order to secure more upside. This may take the form of either a single day or intraday pullback to that level with the way the economic data is pushing the market right now.

For now the Dow remains in short term bull trend within an intermediate neutral trend and primary bull trend.

Sales Data Beats!

2012-01-04T17:01:00.000-08:00

The Dow gained 21 points today as economic data continues to recover.

Fundamentals
Despite early short term profit taking, better than expected sales data today encouraged investors to return to equities gradually throughout the day, taking the market back into the green from a red opening. Indeed, the recent trend of better than expected economic data seems to have caught up with investors at last as they cautiously return to the market despite uncertainties in the Euro zone. In fact, this Friday's jobs report might be the catalyst needed for at least a short term bull trend.

Technicals
A largely sideways day in the market as expected following Tuesday's strong rally. Even more encouraging is the fact that the Dow seems to be holding the recent breakout strongly. Expect a couple of sideways days more and we should see the Dow continue upwards as long as the 12,200 support level holds. When that happens, we could then call an intermediate bull trend.

For now, the Dow turns a short term bull trend within an intermediate neutral trend and a primary bull trend.

Happy 2012~~!!!

2012-01-02T19:35:00.000-08:00

Happy New Year 2012!

This is my first post for the year 2012 and 2011 has truly been a challenging one.

Surprisingly, even though 2011 proved to be uncertain and painful most of the year, 2011 actually turned out to be a slightly positive year overall with the Dow gaining 5.5% and S&P500 closing at par with 2010's close. The Dow also made a third year of gain since 2008, which on a yearly basis, continues the recovery scenario.

So far, the recovery from the 2008 crisis has been volatile but steady with volatility coming mainly from the Euro zone. I would see 2012 as a year of resolution of most of the global issues arising out of the 2008 crisis before the real bull market can happen. However, the market is also at a point where it could easily melt back down into an intermediate bear trend or primary bear trend if we don't see a breakout and strong support around the 12,500 level.

Indeed, the world is in uncharted territory and much has changed since the 2008 crisis in terms of investments as well as business. We need to be able to cohttp://www.blogger.com/img/blank.gifnstantly adapt to the changes and adapt our mindsets as well. Investors need to be more and more patient and be able to expand their arsenal of investment weapons in order to profit consistently under such market conditions. It is no longer enough to be able to profit under trending conditions (using swing trading methodologies such as my Star Trading System) but also under volatile sideways conditions (using position trading methodologies such as my Ride the Flow system). Yes, this is the era of the sophisticated investor and even small retail investors and traders require such sophistication to make any kind of profit.

As such, I would say the theme of year 2012 for most retail investors and traders would be "EDUCATION". Most have seen how hard it is to profit in 2011 and this should trigger the need to get more sophisticated and educated. Remember, the first investment for all profitable investors and traders is in oneself.

Here's wishing everyone, an exciting and fulfilling 2012!

Sale Data Beats But Dow Down...

2011-12-28T17:50:00.000-08:00

The Dow retreated 139 points today despite continued growth in sales.

Fundamentals
Better than expected sales data today failed to overcome continued bad news from the Euro zone. This, along with the fact there is but one more full trading day before the New Year long weekend, caused investors to rush back for the safety of bonds once again, depressing bond yields strongly across the board. However, with the current trend of better than expected economic performance, we could see a very encouraging first quarter of 2012 as long as the Euro doesn't blow up. Yes, it is still a matter of time the Euro mess gets resolved painfully in my opinion.

Technicals
The Dow retreated today as I have expected on retreating volume as it retests the integrity of the recent breakout. In fact, the Dow could remain around this area for the rest of the week as volume retreats and investors get ready for the new year. It seems like Santa Claus isn't visiting the market this year afterall.

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

Final Week of 2011...

2011-12-27T00:35:00.000-08:00

Welcome back from the Christmas Holiday!

This is the final week of 2011 and is therefore another holiday shortened week with market closing early on Friday ahead of the New Year. The market is expected to trade with low volume and therefore fairly volatile this week with focus on Tuesday's Consumer Confidence and Thursday's Jobless Claims as well as Chicago PMI. Last week has been a week of great economic numbers, allowing the Dow to make a strong topside breakout of the 12,200 zone. However, the breakout happened on such low volume it is hard to see a strong trend coming out of it unless we see some strong followup this week, which is unlikely to happen on strong volume either. As such, it is still time to be cautious and not to be too enthusiastic on jumping in on the bullish wagon yet.

Optimism Ahead of Christmas

2011-12-22T18:39:00.000-08:00

The Dow closed higher by 61 points today as most economic data today beat consensus.

Fundamentals
It was truly a day jammed packed with economic data today. Even though GDP didn't turn out as well as expected, the much better than expected Jobless Claims, Consumer Comfort, Consumer Sentiment and Leading Indicators quickly took the market into the green and held it there for the rest of the day. Today's data continue to paint the picture of economic recovery particularly in the area of jobs and consumerism. Trading volume was also very healthy today, setting the market up for a positive Christmas week.

Technicals
The Dow is once again at the doorstep of the 12,200 points resistance zone. However, this time round, the Dow has a real chance at breaking the resistance zone at last and that might happen next week.

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

Welcome To Christmas Week!

2011-12-19T16:08:00.000-08:00

The Dow retreated 100 points today to a bad start to Christmas week.

Fundamentals
Investors sold off today as a wave of pessimism swept across global markets from Asia on uncertainty surrounding the death of North Korean leader. Uncertainties surrounding the stability of the region under the regime of the new young leader caused investors to take to bonds once again. Bond yields declined across the board to recent lows but strangely, options traders seem to be more optimistic today despite the drop, taking total equities put call ratio below par in favor of call options. However, one day of optimistic options trading doesn't mean anything. We can expect the rest of the week to be a low volume, unenthusiastic one ahead of the Christmas holiday.

Technicals
The Dow made a decisive and dangerous drop below the 30MA and 12,000 support zone today which completed an intermediate term head and shoulders formation. Such a formation puts the odds to downside with immediate support at about 11,600 points. Failing which, we could expect some new lows with intermediate neutral trend turning bearish. Santa Claus really seems to be absent this year...

For now, the Dow turns a short term bear trend within an intermediate neutral trend and primary bull trend.

Dow Continues Congestion...

2011-12-12T17:55:00.000-08:00

The Dow dropped 162 points today as global markets sold off once again on macro uncertainty.

Fundamentals
Investors sold off globally today as results coming out of the Euro summit over the weekend failed to please investors in a big way. Investors rushed back for the safety of bonds, depressing bond yields significantly. Traders also rushed back for put options for the first time in weeks, taking total equities put call ratio above par in favor of put options trading. Indeed, worry in the Eurozone is once again taking over the market with the fading memory of much better than expected US economic data released in the first week. Once again, the market is going to ebb and flow with news from the Eurozone, at least for this week, creating a volatile trading week.

Technicals
The Dow continued its super congestion between the 12,200 and 12,000 points level today. The Dow has been trading largely within this region for the past 8 sessions with the last 3 sessions touching both the upper and lower limit intraday. Once again, the 12,200 points level proved itself to be an extremely strong resistance level. If the Dow fail at the 12,200 points level once again, it will complete an intermediate double top formation with support at around the 11,200 points area once again.

For now, the Dow turns a short term neutral trend within an intermediate neutral trend and primary bull trend.

Dow Gains Despite Weaker Sales

2011-12-06T17:26:00.000-08:00

The Dow closed higher by 52 points today despite poorer than expected sales data.

Fundamentals
Sales data turned in largely worse than expected today, putting pressure on a market that has just found some momentum from last week's slew of better than expected data. However, that didn't stop investors from continuing their return back to equities as bond yields continue to rise and options traders continue to trade in favor of call options in a pattern that is predominant during largely bullish markets. All of these continue to give the market a largely optimistic sentiment despite obvious volatility. The next big number to look forward to would be Thursday's Jobless Claims.

Technicals
The Dow is once again right at the 12,200 points resistance with obvious selling pressure throughout the day, taking the Dow off the 12,200 point level itself. With the Dow in short term overbought condition, we may see yet more struggling around this area before it muster enough energy for a breakout but odds now favor a topside breakout in continuation of the volatile bull trend.

For now, the Dow turns a short term bull trend within an intermediate neutral trend and primary bull trend.

Dow Made 7% Week...

2011-12-04T16:13:00.000-08:00

What a week is was last week as US economic data turned in consistently stronger than expected, giving the market a much needed boost. In fact, the Dow made a huge 7% run last week on a week-on-week basis, which is totally phenomenal. This took the Dow once again to the doorway of the 12,200 points resistance zone, which it failed to break last month after multiple testing, in a slightly short term overbought condition. With a quiet week ahead, we might see the market succumb to a bit of selling pressure like we saw last Thursday and Friday before it muster the kind of strength needed for a topside breakout. The Dow looks very much set in a volatile uptrend with huge ups and downs, pushing each peak slowly upwards until perhaps a resolution of the Eurozone issues. Investors definitely ran back into the safety of bonds last Friday, depressing bond yields across the board but trader sentiments continue to be more positive than negative as total equities put call ratio remained below par for 5 straight days, something which we have not seen since the July correction. All in all, I do see a topside breakout coming up, perhaps next week?

Dow Goes Sideways As Expected

2011-11-29T18:48:00.000-08:00

The Dow closed marginally higher by 32 points today as expected on better than expected economic data.

Fundamentals
Today's slew of economic data turned in largely better than expected, especially the Consumer Confidence number, leading to a largely optimistic day. However, short term profit taking quickly set in later in the day and took the market off its best levels for the day. That did not stop investors from moving back into equities from bonds lifting bond yields across the board once again and options traders surprisingly kept total equities put call ratio below par in favor of call options trading for a second straight day in a row, which is something we hadn't seen in a while. It is now a battle between US economic data and news from the Eurozone as every better than expected economic data lifts the market while news from the Eurozone puts pressure on it creating the kind of volatile market condition the US market is going through right now. A better than expected ISM Index and Jobs report later this week would certainly help lift the market for the short term.

Technicals
As mentioned in my email to paid subscribers yesterday, I expected the Dow to make a few sideways or even slightly negative days these few days following Monday's rally and so it happens. The Dow made a largely sideways day today along the 16,000 resistance zone, which means that it continues to be in danger of turning downwards from here into some nasty lows. As such it is still time to be cautious. A topside breakout will continue the reversal into a longer term volatile bull trend while a bottomside breakout will almost certainly reverse the intermediate trend into a bearish one which could ultimately threaten the primary trend itself.

For now, the Dow remains in short term neutral trend, intermediate neutral trend and primary bullt rend.

Welcome Back From Thanksgiving!

2011-11-27T16:51:00.000-08:00

Well, this year's Thanksgiving leaves little to be thankful for the stock market as investors and traders scramble for safety ahead of the holiday, leaving the market with the ugliest two weeks drop since the July correction. The Dow dropped a total of 4.7% during the short Thanksgiving week alone as investors rightfully stay away in case of any bad new arising from the Euro zone through the long holiday. Yes, the Euro zone continues to be the toxic of global markets and until the toxic is cleared (perhaps with the dissolution of the Euro?) with a painful and significant hit to world markets, I am afraid the market cannot find real strength even if the US economy continues to grow. Interestingly, investors actually started reallocating back into equities last Friday, raising bond yields across the board significantly. Perhaps bond yields are now low enough to consider taking some risk? On the weekly charts, the Dow still look barely hanging on to a bullish reversal pattern but another negative week this week will destroy the pattern and perhaps lead the market into new lows and a new intermediate bear trend. Yes, this is uncertain times that defies precise predictions. Two things are certain, volatility and a slight Bearish inclination in sentiments.

GDP Disappoints...

2011-11-22T17:44:00.000-08:00

The Dow sunk by 53 points today as economic data turned in largely negative.

Fundamentals
US market was hit by a downwards Q3P GDP along with slower sales ahead of the discount week. Bargain hunting in the morning that brought the Dow back into the green took a hit on the FOMC minutes in the after which reinstated higher downside risk due to the European debt issue. Indeed, the European debt issue is an axe hanging over global markets right now and is an issue that almost every economists and financiers think will end with the desolution of the Euro. Investors certainly are cautious ahead of the Thanksgiving holiday, running back for the safety of bonds. Yes, Santa-Claus has failed to come so far. What the world needs is a quick resolution of the Euro issue so that repairs can start in the world markets rather than a prolonged agony that will almost certainly end up the same way. So, will a resolution of the Euro issue result in a global crisis? Well, I personally think the effect globally will be sharp and quick with prolonged effect mostly on the Euro side. However, no matter what happens, as a trader, I will continue to read the market and trade for profit no matter upwards or downwards... as long as it goes somewhere.

Technicals
It is a good thing that the Dow closed within yesterday's trading range otherwise I would have to put the 11,600 support area into question. For now, it is yet significant enough to call it a downside break. What the Dow does tomorrow will be very critical... will the support level hold?

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

Welcome to Thanksgiving Week!

2011-11-20T18:26:00.000-08:00

Welcome to Thanksgiving Week!

US market will be closed on Thursday with an early close on Friday for the Thanksgiving weekend, as such, it is going to be an extremely short trading week with low trading volume. And low trading volume week always mean a volatile week with relatively significant moves. However, the good news is that the volatility has traditionally been in the favor of the bulls on Thanksgiving week; This combined with the Dow and S&P500 both finding support at the top of their last neutral channel, increases the chances of a positive week this week. So far, Santa-Claus rally doesn't seem to happening this year... could it start this week?

US Market Sells Off on Euro Slump

2011-11-16T18:11:00.000-08:00

The Dow dropped 190 points today despite better than expected economic data.

Fundamentals
Investors sold off today during the final hour along with a slump in the Euro. Investors are certainly watching every news and development over at the Eurozone and would rush for safety at the very first sight of trouble. Today, the first sight of trouble is the slump in the Euro. A selloff in the Euro suggests a decline in confidence in the Eurozone which may reveal itself as some pretty nasty news in the near future. Having witnessed how such news from the Eurozone can affect the US market, it is no wonder why investors rushed back to the safety of bonds today, depressing bond yields across the board and why options traders rushed for put options, creating a spike in the total equities put call ratio in favor of put options trading.

Technicals
The combined effect of the Euro slump and the 12,000 points resistance resulted in today's retreat. However, the retreat was a relatively mild one and resulted in a rising low supported by the 30DMA. As long as the Dow turn around tomorrow, it would still be in line for good topside breakout.

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

Dow Retreats Slightly At 12,000 Again

2011-11-14T18:29:00.000-08:00

The Dow retreated by 74 points today as resistance continues at the 12,000 points level.

Fundamentals
There were no economic data or news today to account for today's thinly traded drop, as such, today's drop should be one of short term technical profit taking. Long term bond yields dropped as some investors who do not think the market can stage a bullish breakout reallocate back into equities. This is a week of leading indicators and investors might also be cautious ahead of those numbers as economic data recently has started to become more volatile once again (see Stock Market Calendar).

Technicals
Indeed, today's market action is largely technical in nature with short term profit taking on last Friday's strong single day gain as well as resistance by the 12,000 points level once again. Indeed, the Dow is back up to the ceiling of the wedge formation it is currently caught in but the good news is that the sell-off at the 12,000 points level this time round is an extremely soft and unenthusiastic one on very low volume. This shows that the resistance might be weakening, thus increasing the chance of a topside breakout. Indeed, a wedge formation occurring along a nice up trend usually leads on to more highs.

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

Dow Caught In A "Wedge" Once Again

2011-11-10T18:25:00.000-08:00

The Dow gained 112 points today on better than expected economic data.

Fundamentals
US market celebrated a much better than expected Jobless Claims and Consumer Comfort Index, getting off to a strong start, beat short term profit taking in the morning session to close higher. Jobless Claims unexpectedly made its lowest level since April, dropping to 390K from last week's revised number of 400K. Investors cheered to the news and reallocated strongly back from bonds as bond yields rose significantly across the board. However, general trader's sentiment still seems slightly negative as there was obviously short term selling into the strength and total equities put call ratio persisted above par in favor of put options trading. An above par total equities put call ratio always tells me that the market is still generally uncertain or bearish and can expect to meet all kinds of resistance, which we have witnessed so far. The US market is also caught in a wedge between bad news from Europe and good news on the economic data front with every positive data giving rise to a positive day and then something in Europe taking all that gains away soon. Indeed, until the European issue reaches a firm resolution, the market will not find a committed direction.

Technicals
Indeed, the Dow is literally caught in a "Wedge" formation right now. A Wedge formation is created when prices go sideways in a narrowing channel. The Dow is clearly caught in a wedge between the rising 30DMA and the 12,000 points level right now. Such formations suggest uncertainty in the market which we all know comes largely from the European side. However, the good thing is that such a "Wedge" or "Pennant" formation occurring along a rising price trend usually breaks out in the direction of its previous trend, which is upwards in this case, when the uncertainties get resolved. As long as the 30DMA level holds up, the short term bull trend isn't in much of a danger.

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

Dow Rallies on European News

2011-11-07T18:44:00.000-08:00

The Dow continued to struggle today on last Friday's disappointing Jobs Report but still managed to eke out a gain of 85 points by the end of the day.

Fundamentals
It was a largely negative day in the US market today as investors continue to exit on the poorer than expected Jobs Report last Friday. Bond yields continue to drop today as investors continue to move for safe harbors. However, the weakness didn't last long before investors and traders bought into news from Europe in the afternoon, bringing the market back into the black. Total equities put call ratio declined significantly as put options trading declined against call options trading as options traders reduce their hedges and downside speculation today. Indeed, every development in the European debt issue affects US stock markets almost instantaneously and it seems like it is going to take a major development to really trigger off a sustained rally here.

Technicals
Traders continue to buy into the reversal today on weakness, providing support once again around the 19,000 points area. However, volume was missing from today's market, making today's gain a pretty weak one. Good news is, nothing that happened over the past two trading days changed the reversal pattern. In fact, as long as the bull starts running again, we would be good to call an intermediate bull trend. The Dow is still in a healthy reversal pattern coming out of the volatile neutral trend and still very much set for a new bull leg.

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

Dow Meets Support

2011-11-02T18:34:00.000-07:00

The Dow gains 178 points today as the market accumulates from the steep 2 days drop.

Fundamentals
The Dow gained on relatively thin trading today as ADP employment beat expectations, casting some optimism on Friday's Jobs Report. Fed chairman's speech after 2pm also gave the market a little bit of a boost into the close. Even though it was a pretty big gain in the Dow today, investors didn't quite pour into the market the way they should on really strong days. Trading volume was light and bond yields rose insignificantly across the board suggesting that investors aren't reallocating back into equities much. In fact, options traders continue to keep total equities put call ratio above par in favor of put options trading. All in all, it was a really cautious rally today without much real enthusiasm. Indeed, analysts are expecting a worse Jobs Report on Friday and that kind of uncertainty surely cannot result in clear cut optimism just days before its release.

Technicals
Today's rally is mainly technical in nature as some traders accumulate around the 11,600 level, which was the seemingly unbreakable resistance level of the neutral channel of Aug to Oct. In fact, accumulation around this area can be a substitute for retesting the 30DMA for reversal confirmation, as long as it follows up tomorrow. So far, this new bull trend still looks set and remains healthy as long as the Dow remains above its 30DMA.

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

Dow Makes Best Month In 20 Years

2011-10-31T17:24:00.000-07:00

US Market took a hit today with the Dow closing down by 276 points on short term profit taking.

Fundamentals
The Dow made the biggest monthly gain in nearly 20 years in October so far, leading to a sharp profit taking today despite better than expected Chicago PMI. The selling today was actually global as world markets were generally lower before US market open, leading US index futures sharply lower. That kind of selling along with the fact that the US market had an almost historical run this month and uncertainty surrounding the major economic data and FOMC to be released this week, led to an inevitable profit taking today. Bond yields were sharply lower across the board as bond prices rise on the return to bonds and total equities put call ratio surged way above par in favor of put options trading once again as traders hedge their positions in expectation of a pullback following such a strong monthly gain.

Technicals
Today's sell off was totally technical in nature and could set the stage for the retest of the 30DMA that I have been talking about for a while. Indeed, until we see a strong, successful, retest of the 30DMA, this reversal cannot be deem to be complete. However, taking a look at the monthly chart shows the Dow rebounding nicely and strongly off its 30MMA, which is already a strong mid term reversal. All in all, this means that on the technical front, the market is now mid term bullish inclined with a short term pullback to the 30DMA to be expected.

For now, the Dow remains in short term bull trend, intermediate term neutral trend and primary bull trend