Monday, September 17, 2012

DJIA and Nasdaq 100

for the week starting 17 Sep 2012

On Thursday, Fedebral Reserve Chairman Ben Bernanke announced QE3 policy, to expand its bond purchase program of mortgage bond at USD40 billion per month, target to boost housing growth and job creation. No limit has been mentioned.

Stocks, and commodities (look at Gold!) rose last Thursday and Friday.


In line with ECB plan to buy government bonds of struggling euro zone countries and US Federal Reserves monthly USD40 billion Bond Purchase Program has bring Dow to the highest closing level in nearly 5 years.

After this mid-week euphoria, a more sober period for market may be coming as investors and traders digest what the stimulus means in the long term.

US elections in November, tax and spending cuts, corporate earnings, if the unerlying economic data stays the same, we are going to see the market drop a bit, and trading sideways until election.

Technical Forecast:
Market to trade sideways digesting the mid-week hype.

Market has hit 2L target 13578 pts and technically it should be trading sideways.

Resistance - current high: 13650 pts
Immediate support: 13505 pts
Strong Support: 13350 pts

Sideways trading bias down towards 1/3 @ 13250-300 for the rally since July 2012.

Nasdaq 100

Nasdaq 100 has marched up to 12 years highs.
Bullish and immediate support at 2818 pts.
Strong support 2803 pts.

While we expect market to digest the stimulus announcements, market shall trade sideways in a flag pattern before resuming the up trend.

Stay out for the week while observe for trading opportunities around these support levels.

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