This Stock Market Hours Report is brought to you by Jason Ng, Founder, Master ‘O’ Equity

WHAT A COMEBACK INDEED!

I mentioned yesterday that a slight pullback is expected at the 30MA resistance level and that 1 day plunges are never reliable and then today, we see the Dow come back almost all the way. In fact, if you look at the DIA, which is the ETF trading the DOW (or what I call the DOW sentiment indicator as most commoners tend to trade the DIA and not the DOW, giving an insight on what investors sentiments), it has more than recovered yesterday’s plunge and has gone into the green!

While all these may be exciting, please try to remember that I mentioned yesterday that “these 2 days are critical”. Yes, tomorrow remains critical and if we do not see the Dow break above the 30MA resistance level tomorrow, then the Dow can still laspe downwards into a bear channel. This is going to be a bumpy ride with the VIX making a new 4 years high recently. Expect volatilty to continue.

Has anyone seen market conditions more volatile than it is now??? Up and down more than 200 points daily! Man, I have never seen such volatility since the late 90s! Yesterday’s a flood of evening stars and today’s a full list of morning stars… what has protected us so far is the Star Trading System’s entry procedure. Without an entry procedure, you can imagine how much money a trader can lose.

Thought For The Day : “Discipline and Patience are the hallmarks of every successful trader.”

This Stock Market Hours Report is brought to you by Jason Ng, Founder, Master ‘O’ Equity

FUNDAMENTAL ANALYSIS
What a day! What a D-I-S-A-P-P-O-I-N-T-I-N-G day for all investors. Rarely do we see such a huge barrage of disappointing news coincide in one day. The Dow is down 280.28 points in a single day on 3 main reasons : 1, Plunging Consumer Confidence Numbers. 2, A series of bank downgrades casting shadow on the credit crunch. 3, Fed’s unwillingness to take any significant action (rate cut?) to relieve the current credit situation. All of these occurring after such a strong run up last week and a strong resistance level gave investors all the reason to take profit. I seriously don’t know what the Fed is brewing in their secret cauldron but whatever it is, it better be done quickly….

TECHNICAL ANALYSIS
Well, like I said yesterday, do not be surprised if the Dow pulls back a little in the face of the resistance level. Even though 280 points is not really a “little” but in the face of the overall mid term trend, it remains acceptable. This huge plunge is also strangely backed by only an average volume. This suggests that the majority of the investors out there are still holding on and watching what happens next. Indeed, one day moves in the Dow is never reliable. In fact, I tend to look at a 2 days time frame more and more these day. That said, the Dow does has the potential to really laspe into a long term bear trend. If the Dow continue to plunge and break the 16 Aug close, or worse, the 16 Aug low, it may start a long term bear channel making a series of lower lows while bouncing off the lowering 30MA line. The next 2 days will be critical. If the Dow do not rebound immediate to challenge the 30MA resistance line again within the next 2 days, we might really have to prepare ourselves for the worse. The worse do not happen easily neither does it happen frequently, but who says this may not be one of those infrequent times?

A super rush of evening stars today! I don’t ever remember seeing the Star Trading System give us anything like this before!

Thought For The Day : “Rules Are The Chains Within Which One’s Emotions Must Be Contained”