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

Well, today marks the first real, significant, up day in the stock market for 2008. A couple of great earnings releases really encouraged some investors to jump right in for some speculative cash this earnings season late in the day. However, it seems like participation isn’t all that impressive as bond yields continue to drop across the board, as the flight to quality continues. Even though it was an up day, it really did nothing to reverse the bearish trend so far, at least not yet. Tomorrow’s jobless claims and wholesale numbers are likely to point to more recession and probably erase all the gains we saw today, just like it did late last November. HOWEVER (and that’s a BIG however), if the market should close yet another significantly higher day tomorrow, ideally beating the high of 8 Jan, we could see that reaction rally all the way to the 30WMA that I have been talking about for days now. Fingers crossed.

The Dow rallied significantly for the first time in 2008 yesterday and tomorrow is going to be crucial. If the market failed to follow up tomorrow, we can be sure to see more down days like we witnessed back in November. Adding to that uncertainty is the jobless claims and Bernanke speech tomorrow, both of which will definitely move the market. No wonder the Star Trading System has not been giving us any trades lately.

Thought For The Day : “Patience and Discipline are the key to trading succcess.”

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

FUNDAMENTAL ANALYSIS
Just as I feared, companies are coming out of their holes one by one to warn of soft earnings ahead. I have been building a case of a possible STAGFLATION over the past few days and these earnings warnings just days ahead of the earnings season further supports that view. Gold also hit a record high of $880 today as inflation fears rises dramatically. Growing inflation fears, sloppy earnings ahead and slowing employment… everything continues to point to the dreaded STAGFLATION. What if the Fed really do cut rates again? Well, it will definitely feed the stock market for a day or two but when the inflation numbers start coming in much higher again follow that, the stock market is going to take back all that gains and go down some more… we have seen that over the past few months now, haven’t we?

The Dow dropped by more than 200 points again yesterday and futures are now pointing towards a deep low opening of another 200 points lower! This is definitely panic at its peak! No wonder the Star Trading System is still keeping us on the sidelines! Nobody can profit during panic peaks as that is often when the market rebounds the hardest before you know it! Lets continue to practise discipline and stick to the rules in this tough time.

TECHNICAL ANALYSIS
The Dow was so extremely weak today that the November low failed to provide any support at all! Rather than go up a little to test the 30WMA before falling down the cliff, it is jumping right off the cliff right now! I am going to look at the Aug lows at about 12517 for some support, otherwise, this market is cooked! That being said, with such a panic and the total equity put call ratio surging into put options, it is not surprising to see that reaction rally up to the 30WMA over the next few days. Stock Options traders might want to make sure your aggregate options delta is negative by now.

Thought For The Day : “What doesn’t kill you, makes you stronger.”