MARKET COMMENTARY

All market indexes show signs of indecision. Their volumes also reduced slightly. We need to move leads before we can tell what is next for the financial markets. In the mean time, corporate earnings will continue to affect the way the market will behave. The outcome so far has been one of mixed. Even at this difficult time, there are still corporations reported strong profits such as the Caterpillar and the Baidu.

The Dow has hit an important milestone of resistance - the 38.2% Fibonacci retracement. Although I do not rely heavily on the analysis of Elliotts Wave and Fibonacci Analysis in my study, I do take Fibonacci retracement into consideration when I have found no visible pattern to draw my support and resistance lines. This is the situation I am now in to analyze the Dow chart. The combination of 38.2% resistance and the Spinning Top of the candlestick bar suggest a possible reversing point of the current rebound. At this same time, the Slow Stochastics is screaming to us that the Dow is very, very overbought. Now, we just need the confirmation.

Some reports have tried to link the market performance to the crude oil. However, they are having hard time to do that. The crude oil price has fallen to seven-week low. It appears that it can get as low as $100 by end of this month. The reports look for the hurricane Dolly for leads. But that does not make sense even it had come ashore on the US continent. There was no surprised spike of the oil price. If the market falls later in tandem with the oil price, the analysts will have a hard time pointing their fingers to something. Enjoy the show.

DJIA Daily Chart

The S&P displayed the same chart pattern as the Dow. One thing is for sure, it has finally caught up with the Dow. Now they are on par. They both have certainly had a nice rebound so far.

SPX Daily Chart

Nasdaq has a clear support and resistance zone. Coincidentally, its immediate resistance also rests on the 38.2% Fibonacci retracement. As for the Russell 2000 (RUT), it has hit the 61.8% which is a strong resistance. Let’s watch what happen when the market opens.

RUT Daily Chart

STOCKS TO WATCH:

AIG, MER, GS, MS, FDX, SBUX - Bearish Trampoline

GLD - Bullish Trampoline

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