Current View –

The Day In Review
Today the DOW is up 48.03 points, closing at 11782.35. As expected, there wasn’t a catalyst to provide a clear direction in the market. Prices whipsawed through a 200 point trading range, and closed 80 points off of the high for the day. Trade volume was extremely light, coming in just over 750 million shares.

Technical Analysis

Taking a look at the weekly chart, todays’ trading action did very little to change our market outlook. All three indicators have come up short from showing a buy signal, and the 38.2% fibonacci retracement is still in tact. The only update from Friday is that the Aroon and the Williams %r have started to roll over, which combined with low volume could indicate the current rally has run out of steam.

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The daily chart is more bullish, breaking out of an ascending triangle, and showing buy signals on the PPO, and the AROON. However, the buy signal on the aroon came below the 50 line, which is an indication that the current trend is very weak, and the triangle breakout lacks volume confirmation. The ppo is very close to showing a buy signal as well.

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Recommended Trade Action

The current rally is showing signs of age, with very little volume to backup the current trend. The market is looking for a catalyst to drive it in either direction. Considering the US dollar was up almost 2% today, and oil remained under $115 / barrel, I would have expected a stronger up day if this was going to be a real bull rally.

Wednesday and Thursday, the market might just get the catalyst needed to set a more definitive trend. Important economic news including retail sales, crude inventories, and core inflation data are due out and should provide the pressure needed to drive the market in a clearer direction. For consensus estimates for this economic data, check out briefing.com

All of this considered, I am neutral on the market and will recommended staying “in cash” until there is clear direction.

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