FUNDAMENTALS
Crude oil prices collasped further into the ditch as it closed below $56 yesterday! That spurred the tech sector up significantly as cheaper crude oil means cheaper capital cost. The Dow, on the other hand, was up marginally as it comes under pressure from falling share prices of oil giants like Exxon. This is a market that will readily respond to every bit of positive news like a thristy desert traveller will readily drink every drop of water in an oasis, however, the bigger picture still tells a different story… with the economy slowing down faster than expected and the housing sector uncertain of a soft landing, this is still a very dangerous place to be in. You are still in a desert even though you are standing beside an oasis.

TECHNICALS
Crude oil is once again in a full blown down trend. After spending about 3 months in neutral trend, crude oil has decided to move lower and has helped the market move up significantly. This rally has been the direct inverse of crude oil price so far since August 2006 and should continue to show promise as crude oil price move further down. The Dow closed sideways as it continue to trade in a tight range in a fashion that almost qualifies as a neutral trend. Yesterday’s surge also brought the NASDAQ composite back up into its neutral channel. So, to summarise, yesterday’s surge has resulted in the Dow and NASDAQ going into a neutral trend with slight bearish inclination. This kind of market can still go anywhere.

Jason Ng
Founder, Masters ‘O’ Equity
mastersoequity.com
“Your Personal Stock Option Mentor”

FUNDAMENTALS
Markets disappointed traders in the Bull camp yesterday as what was building up to become a great way to start 2007, collasped mid day after the Feds raised concerns over the severity of the pullback in the housing sector. In fact, the Dow went from a high of 12580.03 to a low of 12405.14, a huge 174.89 points chasm in between! We usually see this kind of points difference on very pessimistic, negative days. Even though the Dow rebounded slightly to close 11 points up by the end of the day, it does not change the fact that a great amount of pessimism exist yesterday, the first trading day of 2007. All these while, the Feds has continuously fed (no pun intended.) investors with small doses of negative sentiments almost on a daily basis over housing and inflation concerns. It is almost like they are trying to prepare investors for “what is to come”. Is the “soft landing” in the housing sector only an illusion? Is a coming recession cleverly disguised as trying to bring inflation down so as to prevent an all out panic? Only time will tell. Tis the season to be cautious…

TECHNICALS
Markets closed sideways yesterday, forming a huge spinning top candlestick formation. Such a formation indicates a strong sense of uncertainty, especially one with such long top and bottom wicks. Such a formation is more common in the Dow but is not something common in the NASDAQ composite index. This sense of uncertainty means that the markets can still go anywhere from this point forward with a slight bearish inclination. Crude Oil broke below its neutral $60 channel yesterday and is looking to trade lower.

Jason Ng
Founder, Masters ‘O’ Equity
mastersoequity.com
“Your Personal Stock Option Mentor”