by Jason Ng, Founder, Master ‘O’ Equity

FUNDAMENTAL ANALYSIS
A very surprising day at the markets today as the Dow rallies 68.34 points and the Nasdaq composite rallies 21.02 points despite a continuing barrage of bad news. Just when all hopes of a rate cut has been buried, a surge in jobless claims and rising oil price added early pressure to the market. However, it wasn’t long before a barrage of bargin hunters stormed the markets and lifted it throughout the trading session. Seriously, this kind of strong, systematic lifting of the market always make me think some big institution is behind it and the first one that comes to my mind is the Feds themselves. It is no secret that the Fed window has been systematically diverting big chunks of money into the market, as if in preparation for the baby boomers’ drawout of the market in the near future. Such systematic buying would definitely be able to lift the markets and make it look nice and rosy for now in order to continue attracting investors… that is definitely what the Feds want.

TECHNICAL ANALYSIS
What looked like a strong up day today was really just another sideways day. The Dow has opened and closed within yesterday’s trading range and the Nasdaq composite has not made a significant new high for the past 4 trading days. Volume was mediocre and momentum indicators are not showing a significant bullish momentum too. All in all, today’s rally look too much like a fake out to me. In fact, the Dow ended in a lower high and a lower low, which is a bearish sign. However, as long as it remains within the Secret Bullish Channel, it can still go up… but that does not mean it cannot break the channel to downside. That is the thing about channel analysis… it serves only as a guide. It is as good as looking as a train rail and guessing where a train might go, but lets not forget that trains sometimes de-rail too.

Thought For The Day : “Cutting Your Wins Short and Letting Your Loses Run Is Your Formula To FAILURE!”

by Jason Ng, Founder, Master ‘O’ Equity

For those using The Star Trading System, you would have noticed yesterday that all our qualifiers failed and move the opposite direction, right? Can you imagine what would happen if you simply entered without using the entry procedures? Our entry procedure is the real magic behind our consistency. Signals formed yesterday can change due to market conditions today. Our entry procedure takes prevailing market conditions into consideration, hence dramatically enhancing our accuracy.

Fundamental Analysis
Seriously, what the stock market did today (Dow +115.74, Nasdaq +21.75) was nothing fundamental. Yes, there was a couple of interesting mergers but nothing that works out to something that can move the stock market this much in a day. The low volume today also suggests that investors are actually sitting on the sidelines ahead of this week’s heavy weight economic releases. Today’s stock market gains are really the result of a small but strong influx of funds. Let’s see if the technicals paint a more meaningful picture.

Technical Analysis
Stocks rebounded today on the “W” bottom setup and Black & White Brothers candlestick formation I mentioned yesterday and therefore did not come as a great surprise. What was discouraging was the low trading volume today. Such a low trading volume do not give much credibility to this rebound and usually ends up like the stock market pullup of 6 March to 12 March… short lived. If the Dow fails at 12300 again, completely negating the W bottom formation and the B/W brothers signal, it might laspe into a bear flag breakdown into another bear trend. This is certainly not the time to start feeling bullish yet.