by Jason Ng, Founder, Master ‘O’ Equity

FUNDAMENTAL ANALYSIS
Markets did a scary and surprising ditch mid day before recovering to close marginally higher today. By the end of the day, the mid day ditch proved to be nothing as advancers still led decliners 2 : 1. Bernanke gave his speech today and made no committment nor comments on things that really matter… as expected again in my post yesterday. The prime mover of the tech sector tomorrow will no doubt be the extremely good earnings by Cisco (CSCO). Cisco was already trading up 4.8% in after hours trading after its announcement at about 5pm! With no new economic release to drive the market, great earnings like these certainly takes center stage. There are still more great market moving earnings releases coming up this week like Bank Of America tomorrow and Eastman Kodak on Friday. Earnings are expected to be optimistic throughout the week on holiday spending. Stay tuned!

TECHNICAL ANALYSIS
Markets closed sideways today in lethargy again. The Dow continues to move sideways in order to form another step in its staircase formation and the Nasdaq Composite moved sideways as it moved into a short term overbought condition. I have expressed the same concern yesterday that the Nasdaq Composite is going into short term overbought so quickly and so far away from its resistance level.This, along with unmistakable loss of upside momentum from most momentum indicators, tells me that the Nasdaq composite is not ready for an all out topside break yet. Unless the CSCO rally do something to help the Nasdaq composite tomorrow, I would say that the Nasdaq composite should stay within a 2450 / 2500 trading channel until it wears off some short term overbought sentiments and then stage another rally. My sentiments therefore remains the same… Up for the Dow and Sideways for Nasdaq.
 
The Star Trading System continues to put us on the sideline in this uncertain market yesterday. Today, lets see if we can get some practise.

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by Jason Ng, Founder, Master ‘O’ Equity

FUNDAMENTAL ANALYSIS
Markets slowed to take a breather today after an exciting week last week. The Dow closed up marginally by 0.07% and the Nasdaq composite closed down by 0.21%. The drop in the Nasdaq composite was due mainly to a severe drop in MSFT after comments was made that the sale on Window Vista do not justify the current high share prices. With no big releases to move the market, investors may be looking forward to more of Benanke’s speeches tomorrow. We all know that Bernanke’s speeches are crafted to sound hawkish at all times so that markets are not affected, so, its really down to the sentiments that are already within all investors to interpret what they hear. My take is that whatever he says will not have a lasting effect on the stock markets.

TECHNICAL ANALYSIS
The Dow and the Nasdaq composite took a break today as they closed sideways. By now, it is obvious that the Dow is forming yet another step in its staircase or saw teeth formation and we should therefore see another new high by the end of the week or early next week. Nasdaq took a breather today as it continued its journey to the 2500 resistance level. Although still a distance from that level, it is already displaying slight indications of short term overbought condition. Usually when prices are this close to resistance level, I would ideally love to see relative indicators and momentum indicators slightly off the short term overbought levels so that it has more technical energy to stage a breakthrough. From what I see of the Nasdaq composite now, it may still have a little problem at the 2500 level once again. This is compounded also by a slowing energy sector as oil prices come against a strong $60 resistance level and have started to show weakness. All in all, my take remains that the Dow is in a Bullish Trend and the Nasdaq composite remains in a Neutral Trend.

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