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

FUNDAMENTAL ANALYSIS
What started as an extremely strong day in the market ended up in complete disaster as the bulls totally gave up the gains for the day in one glorious retreat when crude oil hits $100 per barrel. Crude oil has been flirting with the $100 mark many times over the past few months but never have it closed up above $100 like it did today amidst threats from OPEC to cut production. Looks like OPEC wants oil above $100 in order to maximize the returns on their last drips of oil. So, how does $100 oil make such a huge impact on the stock market? High oil prices = higher production prices = higher retail prices = higher inflation = higher price at the pumps = lower consumer spending = NO RATE CUT! That conclusion is what investors are worried about!

What a rough start for the week! How about going up over 100 points in a day and then back down negative by the end of the day? That kind of volatility KILLS! That is why we ALWAYS stick to the rules! The Star Trading System protects us when market conditions are not right! That is also exactly why there have been no qualified trades for the past month so far. However, this volatility also mean that the bottom is pretty near as bulls and bears are fighting each other so hard. Well, no matter what, when the market makes a decision, we can be sure that the Star Trading System would already have placed us in the right direction.

The rate cuts so far has deflated the dollar too much, in fact, so much that it has started to import inflation. Importing inflation means that imported goods are becoming more expensive due to the lower value of the dollar. The fact that the market has held on to gains very nicely until crude oil breaks the $100 mark around 3pm ET, after which the market literally jumped off a cliff, indicated the amount of fear surrounding the $100 level. In fact, this inflation fear also showed up in commodities as investors flee to gold, pushing the price of gold upwards. If tomorrow’s CPI numbers (see economic calendar) come in higher than expected, that would totally break the market as hopes of further rate cuts diminishes as inflation fears take central stage once again.

TECHNICAL ANALYSIS
More weakness today as the Dow failed to break the 30MA resistance level significantly for a 4th straight trading day. Nothing in the indicators are stopping the Dow from visiting the Jan lows before deciding where it wants to go. I maintain my prior outlook.

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

No qualify signal today after a long weekend. The result from Telechart 2007 scanning gives 8 Evening Star signals and 3 Morning Star signals. M (Macy’s Inc) is the only counter that meet most of the Star Trading System’s criterias & come close to qualify if not because of fail to “earning release” rule. 
M is one of the example of a good quality of signal. It has significant formation day (FD) candle stick’s size as well as the volume and Stochastics trend. But this is not enough based on the Star Trading System qualification criterias. Well, let’s take a good brake today & get ready for tomorrow signals!