by Jason Ng, Founder, Master ‘O’ Equity

FUNDAMENTAL ANALYSIS
Stocks opened deep in the mires and closed mixed after CPI numbers showed a “larger than expected” increase in January by 0.3% (analysts are expecting 0.1%). While the CPI numbers did spark some concern that the Feds may be overly optimistic about the results achieved by the rate hikes so far, markets still ended with pretty decent internals with advancers parring decliners 1 : 1. I am impressed with the overall bullishness in the markets today as it held up such great internals despite a barrage of spirit dampening releases and Oil price surging to close slightly above $60. Today is the peak of the storm for the week and with nothing more to shake the markets this week, I would expect the bullishness to return again tomorrow.

TECHNICAL ANALYSIS
No big surprises today as the Dow dipped slightly as it always had before rebounding into new highs and the Nasdaq composite staged a weak followup to the resistance level break of yesterday. I did not see the kind of strong follow up in the Nasdaq composite today as volume was still mediocre. This does not convince me yet that the Nasdaq composite is ready to trade above the lateral channel within which it has been trading since November 2006. I do however agree that its current sentiment and momentum remains strong to upside. I am not seeing a significant decline in upside momentum in the Nasdaq composite yet as all momentum indicators remain strong. With such strong upside undercurrent, I would expect to see the kind of follow up tomorrow that will change my sentiment on the Nasdaq composite.
If I am so “confident” about the Nasdaq composite, why am I not indicating “Bullish” yet? Well, that is because the Nasdaq 100 is still a distance from its 1840 resistance level and is already into the short term overbought condition. It may be difficult to stage a resistance level break from such overbought condition and if it fails and dips again, it could bring down the Nasdaq Composite too.
That is just me… I am the kind who wants to see real evidence instead of going on a mere hunch. That being said, the Nasdaq composite is still long term bullish as it formed a bull flag formation. We saw similar bull flag formations before in May 2005 and December 2005 before and it usually followed up with a short but strong surge upwards. I am looking for signs and evidences for the beginning of the surge so as to make a move. Thats the difference between swing traders like myself and other long term investors.

I remain Neutral on the Nasdaq composite and Bullish on the Dow.

Instantly Transform Complete Newbies Into Master Option Traders With This Objective, No Guesswork, Option Trading Strategy!
Click HERE to find the secret of The Star Trading System.

by Jason Ng, Founder, Master ‘O’ Equity

FUNDAMENTAL ANALYSIS
Markets continue its bullishness this week as oil prices continue to drop and Fed official’s comments that the housing slump could be bottoming soon and will therefore not drag the economy down. Along with these great market moving news, a couple of great earnings release today also helped the market along. A bullish tone continue to persist in the markets as the earnings season nears its end and that is definitely a great thing. The Consumer Price Index due this Wednesday is going to validate what Uncle Ben has said about controlled inflations and all that optimistic talk last week. If this number fails to impress, it would definitely have a negative impact on the market as everything Uncle Ben said will become doubtful. Analysts are expecting 0.1% versus a 0.5% last month.

TECHNICAL ANALYSIS
Nasdaq made the all important 2500 break today at last! Even though the break was not supported by a very strong voume, it was at least done on rising volume. A steadily rising volume still does speak a lot about a strong trend. I would like to see at least a follow up to this break tomorrow on rising volume to confirm the change in trend. As for the Dow, there was again no surprises as it continues to move sideways with a bullish inclination, completing yet another step in its staircase formation. I would say we should see yet another new high in the Dow by end of this week or early next week.

NEVER Traded Options Before? Get The Basic Option Trading Workshop For FREE By Signing Up For The STAR TRADING SYSTEM or The Master’s PPP Stock / Option Pick Now!