FUNDAMENTALS
Markets were down yesterday as the earnings season continues to disappoint investors across the board, especially in the Tech sector. December PPI numbers released yesterday also showed a slight rise and along with a small rally in oil price, it is certainly not surprising to see more investors taking profits off the table. There is a saying in the chinese market for a phenomenal like this called, “Shaking The Board” and is a way of driving uncommitted investors off the markets before the rally continues for those determined enough to stay with it. Well, that’s from a market that’s still in its infancy anyways. Does this mean that we have just experienced a false rally? I don’t think so. A slightly pull up in oil price and a slight rise in the volatile PPI is hardly surprising. We definitely need to see more convincing evidence than these. Apple released Q1 earnings yesterday, beating estimates by a mile, however, AAPL fell on a Q2 outlook that failed estimates, sparking a small sell off to close down by 2.21%. Apple, however, continues to be Cramer’s no.2 tech choice of the year and I personally see AAPL going further on the mid term as long as the lawsuit against CISCO doesn’t come in the way too much.

TECHNICALS
The Dow closed sideways yesterday as Nasdaq closed down significantly. As I have mentioned in yesterday’s comments, I suspected that the Dow should be forming yet another step in its staircase formation within these couple of days and yes, we saw it begin yesterday as it closed marginally lower. I see a testing of the 12500 level before rising yet to another high. Upside momentum continue to be strong in the Dow and with its strong 30 days moving average support level rising along steadily, there is again no reason to say that this rally is over, yet. Nasdaq closed down by 0.74% yesterday, showing a definite lost of short term upside momentum in our indicators and a sharp turn down from a short term overbought position. This could be a slight pull back before going any higher as mid term indicators continue to point strongly to more upside. We saw the same behavior back in 17 October 2006 where after another 15 days of going sideways, Nasdaq staged a rally. Nasdaq seems to hit a psychological resistance level every 50 points or so and 2480 seems like one of these. Unlike Cramer, I would still say that the Tech is still a buy until we see definite evidence of the end of its rally. Oil staged a small rally yesterday but not without making a new intraday low. This showed that bearishness still persists in oil and that it is most likely a false rally.
 
Jason Ng
Founder, Masters ‘O’ Equity
mastersoequity.com
“Your Personal Stock Option Mentor”

FUNDAMENTALS
Oil plunges further into the ditch to close at $51.40 putting severe pressure on the Energy sector as markets closed mixed. Surprisingly, OPEC still look like they don’t care at all and stated that there are no need to cut production further in order to support crude oil prices. They are probably looking at the current high oil inventory level due to the warm winter as a temporary situation. Nasdaq was further hit by a lacklustre earning season and caused some investors to take some quick profits off the table. Giants like CISCO, KLA-Tenor and NOVELLUS were downgraded yesterday on valuation concerns. Even though there are some profit taking yesterday, the internals still tell us that the bull trend is still intact as advancers par decliners even on a day like this. Apple will release Q1 earnings tomorrow and will definitely be something to watch.

TECHNICALS
Markets closed mixed yesterday as the Dow continued its uptrend and Nasdaq closed marginally lower, sideways, I would say. The Dow made yet another historical high yesterday and sure looks like it should be forming another step of its staircase formation within these few days. Nasdaq closed sideways but still made a higher high which preserves its bullishness. Nasdaq is in a short term overbought position and is not strange at all to see some form of slight pullback. Such a pullback is extremely healthy as long as Nasdaq closes up tomorrow. All in all, the bull trend has just started and with upside momentum still strong, there are no signs nor reasons yet to think that the rally is over. I would see the next resistance level for Nasdaq at the 2710 level.

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