Daily US Stock Market Hours Report and Analysis - What A WEEEKK!!!!

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

Wow! What a week! You are not going to get another more stressful, exciting, turbulent, uncertain, doubtful, you-name-it WEEK!

This week really filters the rich from the broke traders as it test every traders’ nerves and discipline to the ultimate limit. Non-Farm Payroll turned in more than DOUBLE analysts estimates at 166k but did it result in the traditional short term rally? No! The market sold off right after market opening, again, filtering more losers from the winners. This is the week most traders either stick to the game and find success in the future or simply give up in the face of all that uncertainty. Indeed, unpredictability is the name of the game and as traders, we can only manage risks, not profits!

The general market has been acting based on a hidden fear no matter how the major releases turned out this whole week. As if the uncertainty and static fear is not great enough, some high profle senators have to propose a broad based tax hike on businesses! What destroys an economy so near to recession more than that??? Obviously, these “highly intelligent” individuals either don’t understand economic numbers or they are still acting on what they saw years ago! (and yes, beuracratic procedures does take that long to magnifest.)

The upbeat, goldilock, employment report did bring the 3m bond yields down a little, tapering the recently flat looking yield curve. A flat bond yield curve is the very first indication that an economy may be heading into problem (and we all know that, right?).

Crude oil price continues to head for the $100 mark this whole week despite some pullbacks mid-week, making the folks at the mercantile exchanges very happy. Well, traditionally, when the mercs celebrate, the equity folks cry… it hadn’t happened yet and I will be watching this development intently. My take? Don’t bet on the crude oil to stay that high (and don’t bet on the dollar staying that low). On the technical front, the Dow continues to linger on top of its 30WMA, which is normal behavior in a long term bull trend. Never have the Dow correct back down to the 30WMA and then shoot back up like it is a basket ball. It certainly take time to grind and digest the sellers. The technicals on the Dow continue to look healthy but I do see a bit more grinding before a rally actually begins, so this correction is not about done yet (yes, this is only a consolidation, not a trend reversal yet). So is this the time to accumulate? Yes, if you are taking long term strategic positions and No, if you are a short term speculator. As a technical swing trader, I would be waiting for more definite signs to turn up before I go full force.

Next week is going to be a relatively calm week without any really huge releases. Releases of significance would be Monday’s ISM services and Friday’s Consumer Sentiment, both are not huge movers (see economic calendar) What’s your take on where the market will be heading next week? Comment now!

This is going to be a much calmer week than last week (Please See Weekly Market Calendar). The Star Trading System continues to look for a definite direction to set us up into. For now, we need to practise patience.

Thought For The Day : “Every Morning Marks A Brand New Beginning”

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

Today was a photocopy playback of what happened back in 9 Aug as the Dow was tackled down for 362.14 points after entering the 30 DMA resistance band that I mentioned yesterday. It is incredible and scary to see how the market action is almost exactly the same as what happened back in August even though market fundamentals then were very different from what it is today. Will we see the market going lower over the next few days like it did back in August before a rebound? What’s your take?

Today’s message was a cautious one pointing to controlled inflation and growing jobs in a contracting manufacturing sector. The core-PCE is one of the heavy weight inflation indicators that Uncle Ben and his crew watch very closely and having it turn in 1.8% year over year certainly continues to keep interest rate hikes as a distant possibility. The real concern here is the ISM index moving lower for a 4th straight month to near contractionary levels of 50.9 (where a reading below 50 indicates a contracting manufacturing sector). This, coupled with the Chicago PMI dipping below 50, seems to indicate more bad times going forward.

On the earnings front, the effects of the sub-prime meltdown are starting to show up on the balance sheets of the big banks at last. We saw Merrill Lynch sacking their CEO 2 days ago and today, huge losses on the sub-prime front are showing up on Citigroup’s balance sheets too. In fact, many asian banks exposed heavily in CDOs are hit pretty hard too. In fact, I think we would see many more of such losses turning up across the Financial sector in the coming earnings seasons.

Tomorrow’s job report would definitely move the market in a big way with investors looking for something to believe in. Will the proverbial shoe drop tomorrow with the all important job report?

DOWN OVER 300 POINTS! Is this enough reason why the Star Trading System has not given as any qualified morning stars over the last 2 days? That is why as Star Traders, we need to learn to trust the system more than our own judgment.

Thought For The Day : “Real traders love weekends”