by Jason Ng, Founder, Master ‘O’ Equity

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

Markets closed sideways on Friday again amidst all the chaos created by the quadruple witching, consumer confidence numbers dropping to 6 months low and CPI rising 0.2%. All these numbers continue to tell one tale… that the Fed will not be cutting rates anytime soon. In fact, some analysts are saying that fundamentals do not matter anymore but what the Feds are likely to do. Even though I would agree to that for the short term, fundamental economy strength still matters in the long run.

Some readers may ask, “Obviously stocks were down today, why would you say the markets closed sideways?”. Well, simply if the Dow closed within the range of the day before, it is essentially a sideways day as it has merely vibrated within where it did the day before.

Looking at the weekly charts, we see that the Dow and the Nasdaq composite is once again forming “Black and White Brothers” formation atop their respective 30MA. (Please read my post on 21 Dec 2006 for explanations… http://sharemarketcomments.blogspot.com/2006/12/daily-us-market-comments-21-dec-2006-by.html ) There is something different about the black and white brothers formation this time round… a typical strong B&W brothers formation is a closed candle followed by an open candle. This time round, it is an open candle followed by a closed candle. Such a formation is still bullish but it may form a down candle next before rebounding to new highs. This signal is further supported by the fact that the Dow has made a perfect double bottom setup since the dragon tail formation appeared 3 days ago. A double bottom setup, or what is commonly known as a “W” setup, has historically preceded many important rebounds.

The bears certainly look like it is going to sleep with a glitter of conciousness still remaining.

The Star Trading System (STS) gives me 5 Morning Star signals from its 1st Filter today. No Evening Star! Is it mean that we’re entering the bullish market? We’ll wait & see. But as a Star Trader, I don’t trade base on the market direction. I trade base on The Star Trading System, my technical analysis tool. There are always rising stocks in falling markets and falling stocks in rising markets and the Star Trading System always put all Star Traders in the correct ones to trade.

Next step is to put those 5 signals through STS 2nd Filter. The result? Well, none of them passes the 2nd Filter criteria. No trade for me today. Look likes I gonna have a good dinner with my working mates tonite as we’re planning for quarterly team appreciation dinner without worrying about trading stuff. What’s a good timing!

Wish everyone for a good weekend & happy trading.