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

Last week was one of the most turbulent week any trader has ever experienced with the Dow trading within a 1597 points range (19% range!), ending the week up 401 points.
This week is definitely going to be digestion week for all the data that we got last week. Last week’s economic data seemed to point towards some real recessionary numbers in the months ahead, but that didn’t stop investors from accumulating in anticipation of a bottom. That optimism enforced a short term bottom at around 8500 points, which is an extremely important area supported by the monthly 200MA. The Dow is also forming a triangle formation right now, a typical continuation pattern. Such a formation occurring at this level seems to put the odds in favor of the bears. In fact, I would also expect to see one final capitulation in the stock market due to some real recessionary numbers before a real bottom can be found.

Star Trading System’s Thought For The Day : "Every Morning Marks A Brand New Beginning"

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

The Star Trading System continued to keep us out today by having no signals once again. The market has been extremely turbulent this week, going up and down 400 too 500 points almost on a daily basis and anyone with an un-hedged position or a swing trading position in this condition is not only going to have sleepless nights but also have money reduced to nothing at express speed.

Clever traders knows that there are time to trade and there are time not to trade but beginners usually do not have such experience. That is why the Star Trading System takes that level of consideration away from you and makes that decision for you automatically.

The Dow made a critical rebound today, putting in a short term support at around the 8500 level. This rebound is extremely important technically because it confirms the validity of the historical rebound of Monday. As you can see from my posts this week, I have been looking for a strong rebound such as this one to call a support. But is this the bottom? Not yet. A bottom can only be called after 2 or more supports are established. If the 8000 point level is indeed the bottom (supported by the monthly 200MA), then we should see the Dow go sideways for a significant length of time like we saw back in August and then wait for a breakout to confirm.
For now, the Dow continues to be in a short term and primary bear trend, so believers of trend following should still assume it to be so.
Inflation data came in flat today, which did not please investors. Why is that so? Simply because we are definitely going to see GDP come down when the inflation data start coming in negative (which is the statistical recession economists have been waiting for). Inflation can only come down now due to a reduction in aggregate demand, which when combined with the lower aggregate supply right now (which caused the grocession coming into 2008), will only open up the Okun gap and result in recession. In fact, I suspect the final capitulation will take the form of an exodus by investors waiting for the elusive negative GDP number.
Tomorrow’s options expiration day (see economic calendar), which can only mean more volatility given the uncertain weekend ahead.

Star Trading System’s Thought For The Day : "Always Respect The Market"