by Jason Ng, Founder, Master ‘O’ Equity

Many star traders who are beginners to investing do not realise how tricky the prevailing market conditions are and gets impatient when there are no qualifiers lately. Beginners should therefore be patient and obey the system 100% as there are many dynamics in the markets that you do not understand, nor do you need to understand as the Star Trading System automatically puts us in the right track at all times.

FUNDAMENTAL ANALYSIS
The Dow was down 89.23 points today as all hopes of a rate cut continue to diminish. The Fed is apparently torn between inflation concerns and a slowing economy as I have previously noted and the best thing to do under such circumstances is definitely to keep things at status quo and see how things develop. In fact, the stock market took a nose dive early in the trading day as the International Monetary Fund cuts it’s forecast for US Economic growth to 2.2%, almost 1% down. This worry over a slowing economy lasted throughout the trading session. As if to compound the problem, Feds minutes revealed that the Feds will continue to firm policies if inflation continue to be a concern despite a slowing economic growth. Even though sentiments are largely negative today, I still see traces of buying coming in when the Dow was down about 100 points. CBOE Equity put/call ratio was also relatively stable underscoring the fact that there is still an optimistic undercurrent. This is a tricky market condition not for the weak of heart.

TECHNICAL ANALYSIS
What looked like a scary drop today in the Dow was actually nothing surprising. Like I mentioned yesterday, I would not be surprised to see a drop in the Dow back down to the bottom of the “Secret Bullish Channel” (please see my post on 27 March on the Secret Bullish Channel) before rebounding. Looks like it is behaving totally according to plan. There is still some distance to the bottom of the channel and so I will not be surprised to see another down day tomorrow.

Thought For The Day : “Always Respect The Market.”

by Jason Ng, Founder, Master ‘O’ Equity

The Star Trading System continues to look optimistic with significantly more morning stars versus evening stars.

It is incredible to see so many analysts and news reports screaming 8 days of continuous gain in the Dow at the top of their voices when the last 2 days have been merely sideways days. In fact, the last 2 trading days have been as good as extensions of the Good Friday long weekend. The truth is, the “8″ days of gains are only as good as 6 days of gains and such straight gains usually doesn’t lead on too well. Investors are still eagerly waiting for the effects of tomorrow’s FOMC release and the performance of companies in this new round of earnings. AA kicked off the earnings season well as it out-performs analyst estimates and went up more than 2% in after hours trading. Tomorrow shall be judgement day. Seriously, I will not be surprised to see the market go down tomorrow no matter what the outcome may be with the Fed or earnings releases, but I will be concerned about how strong that decline is and how much public support is behind that decline. If I see a weak decline or a gain, then perhaps better days are indeed coming. If I see a strong decline, then we are all back to square one.

Thought For The Day : “Patience and Discipline Are The Hallmarks Of Every Successful Trader.”