Free Stock Market Research Report by Jason Ng, the man behind The Star Trading System (one of the best option trading systems)

Investors decided to beat down stocks today as they come to the conclusion that the Feds may be at their wits end with regards to the inflation situation. With inflation at hand, investors need to cash out of the capital market in order to maintain living standards, hence the sell off and beat down. Did you realize how the Star Trading System seems to see this coming by keeping us out for the past week or so? That is why we always follow the rules and use the Most Conservative Option (week 1 and 2 students willl learn about this in the near future) whenever market seems this wierd.

FUNDAMENTAL ANALYSIS
After moving sideways for almost a month, oil staged a breakout today, shattering the hopes of all investors speculating in a turn around in oil. Oil broke the critical $140 resistance level today as more lip service by OPEC “predicted” oil would reach over $150 this year. OPEC’s lip service today totally beat Uncle Ben’s lip service yesterday. Like I said before, predictions always carry with it an element of self-fulfillment. What will determine the true course of oil? Reality. If oil inventory continues to be higher than expected like it just did, investors would see that the talks are not supported by reality at all. Well, this is going to be a drawn out battle and one that is definitely going to take the rest of the year.

TECHNICAL ANALYSIS
The Dow broke below the March Low support level as I have expected on strong volume as investors decide to keep the bears going. In fact, today’s drop took all of the gains of 2007 away. The Intermediate and short term downtrend remains strong but do not be surprised to see a slight pull up before it goes any lower as this drop gets over extended. That is what we call a Bull Trap where the bulls get trapped in a fake rally. It is also what I always call a “Dead Cat Bounce”.

Star Option Trader’s Thought For The Day : “Always Follow The System”

Free Stock Market Research Report by Jason Ng, the man behind The Star Trading System (one of the best option trading systems)

Investors reacted calmly to the Fed’s decision to hold rates steady. In fact, stocks closed largely bullish as the Star Trading System also followed up with this slight bullishness with slightly more bullish than bearish signals today. Typically, investors need a few days to really decide how to react to a Fed decision… whether to buy or to short. That is why the Star trading system is also cautious this time round by giving us only a few signals.

FUNDAMENTAL ANALYSIS
The Feds held rates steady this time round as most analysts expected. Stocks actually rallied on that news before pulling back slightly to close positive by the end of the day. This intraday rally actually revealed the fact that investors are still negative to a rate hike and the late pull back revealed investors’ uncertainty about tomorrow’s GDP numbers (see economic calendar). What was really interesting was Uncle Ben’s new approach to this situation… LIP SERVICE! Yes! Call it brilliant or call it revolutionary but he is obviously trying it as a new technique to controlling inflation. All he did today was to suggest that inflation and oil is going to come under control, hoping that traders catch on with it and react accordingly. In fact, oil did trade lower on that comment which shows its effectiveness. But will oil rebound tomorrow? Everytime oil trades down like this, it rebounds the very next day. What about the rate hikes? There was nothing in Uncle Ben’s speech to actually suggest that rate hikes are imminent. So, what changed today? Actually, NOTHING! That was why Dennis Gartman said today that “The Fed Meeting Never Happened”.

TECHNICAL ANALYSIS
Again, nothing really changed today. The Dow was totally sideways today as it forms a bearish continuation pattern at the doorstep of the March Low. Even on the technical front, it was as though today’s market never opened. My takes yesterday still stands.

Star Option Trader’s Thought For The Day : “Always Respect The Market”