US Market Today Daily Columns by Mr. OppiE
Archive for June 2009
US Market Today - Mr. OppiE (Author Profile)
June 30, 2009
The Dow retreated 82 points today despite another round of economic data that continues to point towards economic recovery. The Dow was down a
total of 274 points in June, making it the first negative month since March.
Positive economic numbers have been pouring in like an avalanche lately. In fact, investors are expecting tomorrow's ISM index to show yet another better number of 45 (see Stock Market Calendar). So, why is the Dow still not rallying in the face of all these optimism? This is where the divide between economic outlook and market outlook is clear. Even with optimistic economic outlook, the stock market may not move correspondingly due to technical reasons. What technicals measure is the sentiments and behavior of investors, not the economic outlook. Even in times of great economic outlook, there will be pockets of pessimistic market outlooks, especially for the short term, due to fears of being overbought. Yes, there will come a time in every significant rally that the fear of losing the profits made so far outweighs the joy of more profits. That is when investors starts taking profit and ending rallies. The Dow is currently at that point in this intermediate term rally. This is also what is known as a technical pullback.
The Dow failed today right at its 30 days moving average, once again establishing it as a strong resistance level. A follow up tomorrow could lead to a visit to the 8000 points short term support level very quickly. For now, the Dow remains at short term bear trend, intermediate term bull trend and primary bear trend.
US Market Today - Mr. OppiE (Author Profile)
June 29, 2009
The Dow gained 90 points today ahead of tomorrow's Chicago PMI number. Yes, this is not only a holiday shortened week but also a heavy weight week full of heavy weight numbers such as the ISM index on Wednesday and Job Report on Thursday (see Stock Market Calendar).
Investors are clearly expecting the optimistic numbers to continue into this round, hence the early buying. Are all these enough to change the technicals? Clearly not yet. The Dow has been stopped right at its 30days moving average line today which is short term resistance for the pullback scenario. Chances are slim that the Dow will find the strength to break upwards tomorrow no matter how the Chicago PMI turned out but if it does, it merely goes back into a short term Neutral trend with not clear strength to carry the intermediate term rally on much longer. If it fails and retreats tomorrow, short term support would be around the 8000 points level. The US market just isn't recovering like those of the BRIC nations, which are going almost straight up now. Not even the ETFs linked to BRIC nation indices are doing what the stock markets in those countries are doing.
For now, the Dow remains in short term bear trend, intermediate term bull trend and Primary Bear Trend.
US Market Today - Mr. OppiE (Author Profile)
June 26, 2009
The Dow ended down for a second week in a row this week, losing 1.19%.
Despite optimistic outlook and economic data this week, investors are selling into this widely anticipated technical pull back scenario, beating the Dow down everytime it takes a peek upwards. On the weekly charts, the Dow followed up on the evening star signal that was produced last week and with rising bearish momentum, the odds definitely favors the way down. Short term support is at about 8000 points.
For now, the Dow remains in short term bear trend, intermediate bull trend and primary bear trend.
US Market Today - Mr. OppiE (Author Profile)
June 24, 2009
As expected, optimistic comments from the Fed did nothing for the market as investors continue to sell into the pull back scenario. In fact, not even the better than expected durable goods order helped.
The Dow had a good early day run but was quickly beatened back to the reality of the pullback, closing down marginally by 23 points. It is pretty clear now that we are in a technical driven market and that looking out for where this pullback ends up is the most critical thing for this whole reversal scenario. So, how far down is good? As long as it does not make a new low, it is good. This pullback will tell us if the rally we had is a bullish reversal or just a Bear market rally. Again, I doubt if tomorrow's GDP number will help with continuing this intermediate bull trend due to reasons I cited yesterday (see stock market calendar).
For now, the Dow remains in short term bear trend, intermediate bull trend and primary bear trend.
US Market Today - Mr. OppiE (Author Profile)
June 23, 2009
The day before every FOMC announcement is usually a sideways day (see stock market calendar). The Dow made a sideways day down marginally by 16 points today. This is also a common occurrence following every large single day moves like the big breakdown we got yesterday.
The short term odds remain bearish as investors may be hesitant to react to anything good from the Fed tomorrow due to this technical retreat and may be more than willing to sell down this retreat even further. That's what technical analysis is really measuring, sentiments. It measures how investors are behaving despite what was being said on the news. Yes, we call that many differents names in technical analysis; Momentum, Support / Resistance etc etc but all these names mean only one thing, and that is what investors are feeling and doing at those prices. Yes, sentiments!
For now, the Dow remains in Short Term Bear Trend, Intermediate Bull Trend in a Primary Bear Trend.
US Market Today - Mr. OppiE (Author Profile)
June 22, 2009
The widely anticipated technical pullback in the US market begins at last with the Dow following up on last week's drop to downside by 200 points today.
Yes, today's move has nothing to do with news. Economics numbers haven been upwards looking so far with only small pockets of pessimism. This is the widely anticipated pullback that will tell us if this is a bullish reversal we are witnessing or simply the primary bear trend resuming its downwards course.
According to the Dow theory, a bullish reversal is only confirmed if the Dow does not make a new low on this pullback and then rebounds to new highs. Short term support is around the 7700 region. Sad to say, the 200 days moving average won the battle this time and it will be up to the rebound to challenge it again. The Dow had a good run so far and is way overdue a break like this.
US Market Today - Mr. OppiE (Author Profile)
June 21, 2009
The Dow made its first significant retreat last week, down 2.95%, making a new 3 weeks low.
In fact, the Dow formed a evening star candlestick formation on its weekly chart right around its 50 period moving average. An evening star candlestick formation is a bearish candlestick formation which is particularly strong around resistance levels. An evening star forming around its 50 period moving average during a time of widely anticipated pullback certainly must ring a bell of caution.
This week is also FOMC week and the Feds are definitely going to keep rates unchanged and say a lot of good things about the economy going ahead (see stock market calendar). Since there isn't going to be any surprise, I would expect the week to be largely technicals driven, which may be a little less than bullish with the way the Dow is behaving now. Before you walk away thinking that the pullback is a bad thing, please understand that the quality of the pullback decides if we are now reversing into a bull market or still in a bear market under the Dow Theory. Until it does, this will always be an intermediate bull trend in a primary bear market.
US Market Today - Mr. OppiE (Author Profile)
June 18, 2009
The Dow rebounded slightly off its critical 30days moving average support today by 58 points today as more optimistic economic data hit the wire.
Better than expected Philly Fed, leading Indicators and jobless claims (see stock market calendar) supported the Dow from breaking below its critical 30 days moving average today. However, investors are cautious ahead of tomorrow's quadruple witching day as well as the weekend ahead and did not jump in on the data. In fact, trading volume remained mediocre today.
The Dow is now at the crossing point between its 200 days moving average, which has been the resistance level the past week, and its 30 days moving average, which provides support. Looking back, we can see that the crossing of the 30 and 200 days moving average is an important event as it usually signifies the beginning of a new trend. The question now really is, will it do so? I pretty much doubt we will have a satisfactory answer this week as tomorrow is arbitrage day (quadruple witching). Nonetheless, the future never looked this bright going forward and the long term outlook remains optimistic. For now, the Dow remains in short term neutral trend, intermediate term bull trend and long term bear trend.
US Market Today - Mr. OppiE (Author Profile)
June 16, 2009
The Dow continued down by another 107 points today on better than expected housing data but poorer than expected store sales (see Stock Market Calendar).
In my opinion, today's move it more technical than anything. Investors sold off as confidence in this rally slowly faded away, to be replaced by the fear of the pullback everyone's been expecting. In fact, with quadruple witching coming up on Friday, some profitable investors would also want to take some profit off the table rather than risk the volatility. Certainly there are more ways to protect one's profitable positions in the face of uncertainty like the Protective Put, but not everyone thinks the same way. The Dow is now barely on top of its 30days moving average, which is the most important support for this intermediate bull trend so far. This move down, coinciding with the 200 days moving average, puts the Dow in an extremely disadvantageous position. As I have mentioned before, the 200 days moving average is a strong resistance level and the Dow isn't going to be able to break it without a fight. It seems like its happening right now.
US Market Today - Mr. OppiE (Author Profile)
June 15, 2009
The Dow sold off by 87 points today as the Empire State Index turned in worse than expected (see stock market calendar).
The Empire State Manufacturing Index, or commonly known as the Empire State Index, is a monthly survey of manufacturers in the New York area. Survey covers past conditions as well as future expectations. Now, the Empire State index, like most other index, is volatile and does not go straight up or down. Even though it failed to go higher this time round, it is still higher than the last lower number two months ago, which still indicates a rising trend. This is definitely a positive. On top of that, future expectations are really positive in the report as well.
What the Dow did was a healthy pullback to its 30 days moving average, which has been the support for this intermediate term rally so far. Over the past three months, the Dow has bounced off its 30 days moving average for new monthly highs. Will it do so again? The answer will only be revealed tomorrow. If it follows up to downside tomorrow, breaking the 30 days moving average, the big pullback every analyst have been waiting for would start.
The Dow remains in short term neutral trend, intermediate bull trend and primary bear trend.
US Market Today - Mr. OppiE (Author Profile)
June 12, 2009
The Dow closed the week sideways this week, up a marginal 28 points. This week continued to be a week with optimistic economic data and returning optimism. However, much of the optimism and positive outlook has been priced into the rally last week. This is probably why we didn't see much action this week as trading volume continued to decline on expectations of an imminent technical pullback.
The Dow is almost at its 9000 points resistance level, which could prove to be challenging. In fact, many analysts are expecting the Dow to start its widely expected pullback right at that level. So far, bullish momentum continues to be prevalent in this intermediate bull trend with no clear signs of weakness. Next week's Leading Indicators, Jobless Claims and Empire State Index may be instrumental to deciding if the Dow breaks the 9000 points level or go into a retreat (see stock market calendar). Next week would also be a volatile week as it is Quadruple Witching Friday once again. This is indeed the favorite day for derivatives day traders and options arbitrageurs.
The Dow remains in short term neutral trend, intermediate bull trend and primary bear trend.
US Market Today - Mr. OppiE (Author Profile)
June 11, 2009
The Dow closed yet another largely sideways day today, up by 31.9 points, as jobless claims continue to decline. Indeed, the jobless claims number is indicating ahead of the unemployment number that the worst in the job market may be over. This, together with the rising long term bond yield indicating future inflation expectation, paints a very healthy recovery picture.
Today was clearly a much more bullish day than the past 7 trading days as the Dow made a new 4 months high intraday. This, together with the fact that trading volume is now rising once again shows that trading interest is once again returning as fears of the big pullback begin to diminish. Traders are also seeing that the 200 days moving average isn't yet causing any problem as the Dow glided past it. The next big hurdle to cross for the Dow is the 9000 points resistance level which it failed multi-times back in December 2008. Options traders also gave their seal of approval with the put call ratio going down by 9 basis points to 0.77, indicating more call options trading than put options trading.
The Dow remains in short term neutral trend, intermediate bull trend and primary bear trend.
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