FUNDAMENTALS
Markets rose slightly yesterday in range bound trading yesterday. Volume was also significantly lower than the 15 days average. Traders are sitting on the sidelines yesterday while waiting for the Fed release today. Although it is almost 100% sure that it is going to be an interest rate pause with a dovish promise to lower interest rates in the future, it is still customary for investors to feel edgey about it. Institutes will also be covering their positions for the year this month and will probably do it some time after the Fed release. Such a move will definitely give a definite tone to the market.
 
TECHNICALS
Markets continued sideways yesterday with no surprises. The Dow remains overbought throughout this consolidation, which is very different from its previous behavior. However, being overbought does not necessarily mean there are no further upside to come. Trendlines and support levels remain intact, showing no signs of a correction in the making…yet. Oil continued to correct as it fall down another step to $61.20. That drop also took it out of the short term overbought condition made by the end of November rally while still maintaining a strong support level at $61. This may give it a reason to go up sometime in the near future.
 
The almost equal number of morning versus evening stars seem also to point to a sideways market right now.

Jason Ng
Founder, Masters ‘O’ Equity
mastersoequity.com
“Your Personal Stock Option Mentor”

Welcome back from the weekends!
Hope you are mentally and spiritually recharged for the challenges ahead. A warm welcome goes to our new week one students too.

FUNDAMENTALS
Hourly earnings rose just 0.2%, which is 0.1% short of expectation. That proved that the Feds are right on track and that we can expect no further rate increase when the Feds meet this coming Tuesday. That gave the market a very slight boost as it gained marginally last Friday. With the Fed meeting just round the corner, market action is expected to be slow until then. We all know by now that the Feds are looking to cut rates by March 2007… will it happen during this meeting?

TECHNICALS
Markets continue to move sideways with no surprises. It is really going to take a lot of strength to break the 12340 resistance level. Oil price seems to also be failing at its resistance level of $63. Oil gained strongly last Friday with an intraday high of about $62.70, looking strong to challenge the $63 level but failed by the end of the day and now, it is trading at a mere $61.70. Looks like it is going to take more action from OPEC and some significant impact on oil inventory numbers before it can work its way up beyond $63. The number of evening stars versus morning stars today seems to indicate a market downturn… or at least a short term one.

The number of evening stars versus morning stars today seems to indicate a market downturn… or at least a short term one.

Jason Ng
Founder, Masters ‘O’ Equity
mastersoequity.com
“Your Personal Stock Option Mentor”