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

FUNDAMENTAL ANALYSIS
The Dow rallied 117.54 points today in an encouraging struggle against the odds! The dollar has reached a new low against the Euro, crude oil approaching $100 and the financial sector continues to look doubtful. Seriously, nobody knows for sure what this optimism in the market is all about today as market futures was already pointing sharply upwards before opening. The weak dollar definitely has it’s pros and cons; Pros: makes American products more competitive in the global market and has been the main driver behind the huge growth in exports in the Q3 GDP numbers. Con: makes imports more expensive as exporters raise prices to combat the weaker dollar, thus importing inflation. The question really is, how much does Americans today depend on imports for their daily needs? (If you are American, why don’t you comment to this post about this issue? ) On the brighter side, there is now a lot of tax cut and free trade plans coming out of the White House and that could really help the economy in the long run if they are signed tomorrow and in the days ahead. Well, the slogan for the day definitely is what the President proposed; “Keeping America Great”.

TECHNICAL ANALYSIS
This is definitely a key reversal day in the Dow today. A key reversal day is a technical analysis juncture where a stock either break its current pattern and go up or, on the flip-side, if a key reversal day fails, the stock can be in a lot of trouble. The 117.54 points rally in the Dow today broke the pattern we saw back in 14 Aug and opened up the possibility of a rally from this point onwards. In fa ct, going slightly back in time, we saw that the Dow rarely go into a short term rally unless it forms a “W” bottom formation. We saw a “W” bottom formation back in 2 July, we saw the same “W” bottom formation back in 21 March and a huge “W” bottom formation back in 24 July 2006. So what’s missing in today’s “W” bottom formation? A volume surge within the “W” bottom formation. We usually like to see at least 1 volume surge within the days enclosed by the “W” bottom to demonstrate a blow-off but we are not seeing this. Well, the Dow’s long term and mid term bull trend remains safely intact and the 30WMA continues to hold up strongly so on the technical front, we remain bullish. What remains is catching the proverbial falling knife… where exactly is the bottom? Will this “W” bottom formation signal a bottom?

Some morning stars are beginning to turn up in the Star Trading System at last… does this mean that the bottom has been reached? Yes, IF the star trading system continues to produce more and more morning stars over the next few days.

Thought For The Day : “Discipline and Patience PAYS!”

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

FUNDAMENTAL ANALYSIS
What was shaping up to be a terrible day at the markets, ended up with the Dow down only 51.70 points, which is a lot better than suggested by the extremely weak opening that brought the Dow down by 100 points within the first 3 mins. Dow futures was pointing sharply down this morning with all the horrific news piping in from the Financial sector and in particular, from Citigroup and Merrill Lynch. It seems like the real, tangible effects of the subprime crunch has just begun to show its ugly head and to really take people down from high places at last. Investors are indeed beginning to wonder…

The market has never been in this much turmoil in one year than it had in a long long time. With all the big financial giants collasping, the market outlook continue to look even more uncertain. So, what does uncertain mean? Uncertain mean that it can turn for the better or for the worse unexpectedly!

“Who’s Next”? The ISM business index released today, which was not a major economic indicator, turned up better than expected, beating estimates at 55.8%, lifting the Dow off its lows for the day. This release is just about the only trace of optimism investors could hold on to today, preventing the Dow from going even lower. It is hard to see where any more optimism can come from with the rally in oil and gold along with the continued weakening in the dollar. The economic numbers have turned in great so far but the outlook going forward, at least for the next 12 months, remains largely uncertain. While you are here, you might want to check out my free option trading education initiative that has recently taken the internet by storm. Bookmark it, link to it, tell your friends about it and I would be more encouraged to write in this blog more!

Too many people associate uncertainty with the market turning to a bear trend, no, that is not the case at all. If the market is turning into a definite bear trend (which the market has only experienced twice so far), the Star Trading System would have given us many qualified evening stars by now. Today, the Star Trading System continues to sit on the sidelines and that is actually a good thing to do until the market starts to have some clarity.

TECHNICAL ANALYSIS
Well, even though it was a volatile day today, it’s still to be classified as a sideways day as trading range is largely contained within yesterday’s trading range with an insignificantly lower closing. It is extremely hard to tell if the market has found a bottom here or not. Looking back on 13 August, we saw the same market action where 2 days of sideways trading after a huge dip led to more downside. Even though the long term bull trend remains intact, short term outlook continues to be extremely uncertain on the technical front and on days like this, I always prefer to sit on the sidelines.

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