- 21
- Feb
This Stock Market Hours Report is brought to you by Jason Ng, Founder, Master ‘O’ Equity
FUNDAMENTAL ANALYSIS
The market staged an impressive mid-day come back for apparently no fundamental reasons at all. Crude oil remains high, flight to gold continues, headline inflation is way higher than the Fed’s expectations… nothing fundamental supports this turnaround at all. In fact, the bearish sentiment during the morning session should have been carried on throughout the day. Clearly, some institutions are beginning to accumulate stocks at these levels. On the economic front, the ugly head of STAGFLATION is becoming more and more real as inflation and slow growth becomes an increasing concern. More rate cuts? I don’t think more rate cuts is the way to go anymore as that would only serve to deflate the dollar further, causing higher inflation. What’s the point of having more money when your money is fast becoming worthless, right?
The Dow continues to struggle at critical resistance level and the Star Trading System has not given us a qualified trade ever since the Dow begun going sideways in a tight range… for obvious reasons… this kind of market condition simply does not result in high probability, high profit trades. However, market conditions like this rarely last for a few months before the market decides to go up or down decisively. Just as the Star Trading System gave us a couple of good down trades when the Dow dropped in late December to January, I am sure such good trades will once again come when the market arrives at a decision, soon.
TECHNICAL ANALYSIS
Once again the advance of the Dow is stopped by the almighty 30MA resistance level! In fact, the 30MA have stopped the advance of the Dow ever since the great January decline ended! The 30MA line ended the relieve rally on 4 Feb and now threatens to once again beat down the Dow. Interestingly, the Dow doesn’t look like its going to give up without a fight this time round and if it should break above the 30MA line on higher volume tomorrow, we could see a nice leg up! Yes, because everyone’s thinking that a test of the Jan lows is compulsory before a rebound, that could well be the very reason that stops it from happening at all as investors accumulate before the rebound begins. On the chart pattern basis, the Dow is forming a bearish pennant pattern which signifies a great deal of upside resistance and more room to downside. It is going to be interesting to watch how it unwinds.
Thought For The Day : “Patience and Discipline are the hallmarks of every successful trader.”
