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

The Dow stood its ground valiantly against the relentless waves of ruthless assualts by sellers, weak existing home sale report, growing oil price and bad earnings release. Wave after wave of sellers slammed into the shields of it’s Phalanx but it never gave ground nor gave way, defending the last line of defense around the 13500 hot gate. More than half the day have passed before the waves of sellers exhausted themselves allowing the Dow Phalanx to prouding advance and hold ground. By the end of the trading day, much of the lost ground has been retaken. The King would have wished for more time to push into positive territory but time, as usual, wasn’t his ally.

Tomorrow’s main mover would definitely be the jobless claim report, or what is correctly known as the Weekly Claims For Unemployment Insurance report. This indicator is released by the Department of Labor since 1967. Increased unemployment dampens spirits and affects spending going forward, that is why it is now an important leading indicator. Investors are definitely looking forward to a drop in unemployment claims in order to paint some optimism into the generally pessimistic picture now.

The King stands fast and the Phalanx looks strong… what do you think?

Another scary day, wasn’t it?
CIEN went into a type 1 last gasp action (please read the Star Trading System’s manual if you do not know what it means) and scared the hell out of most of you. That is the reason why we hold doji day stop loss… if you use another other means to control loss during the first 2 days, you are risking a stop out unnecessarily.

Thought For The Day : “Traders Never Predict The Future… Traders Prepare For It.”

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

FUNDAMENTAL ANALYSIS
The Dow closed higher for a second straight day since it ditched over 300 points last week. There wasn’t any economic releases today so the gains must have been due to bargain hunting along with buying into the great earnings of a few blue chips. Tomorrow’s existing home sales number is expected to rock the boat again. Existing home sales measures monthly sales of previously owned single family homes and is published by the National Association of Realtors. Existing home sales didn’t used to be an important release before the credit crunch because buying and selling of existing homes adds nothing to the economy despite exising home sales (2nd hand homes) accounting for 80% of all home buying transactions. However, it has gained in importance lately as it is a good indication of the status of the credit crunch. Everyone’s waiting for the day existing home sales recovers as an indication that the credit crunch is coming to an end. In fact, bargain hunters are already in the market, sweeping up foreclosure deals. It seems like the worse is behind us… or has it? What’s your take on this? post your comments!

TECHNICAL ANALYSIS
Not surprising nor extremely encouraging to see a couple of days of bargain hunting after a huge drop. Yesterday’s market action formed a small dragon tail formation but it was not backed by a volume surge nor was its tail long enough, making it an extremely weak one. A dragon tail formation is a hammer formation with an extremely long tail, occurring after a series of significant drops. The last dragon tail formation on volume surge started a rally back in 16 Aug 2007 as well as back in 14 March 2007. Right now, the Dow has rebounded off the 50 and 100DMA, but still needs to make a break above the 30DMA before the danger’s over. If the Dow should fail again, the next support level would be the 200DMA which the Dow rebounded off the last time in 16 Aug. For now, it is not certain nor is it remotely clear where it might be heading even though the long term trend remains bullish. The question is, when will the rebound happen? Right now? or later at the 200DMA line?

What a huge rush of morning stars today! Such a huge amount of morning stars produced by the Star Trading System today shows that many stocks are joining into the rally, making it even more possible.

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