What Is The Dow Jones Industrial Up To: Wait And See
By Debra Jones on February 9, 2011, 1:03 pm
Last 3 days Dow Jones Industrial Average has small moves; spinning tops on the chart are not good signs. Market is out of steam. Pattern formation hints to Evening Star or Harami, but without confirmation worth only to note it. Price dances very close to broken 12,000 resistance level. It is important to keep it in mind that price can fall again under resistance level.
May Fall Again
From another perspective, however, these odds add up to an above-average probability that the Dow will fall today. That’s because, since 1896, when the Dow was created, this benchmark rose 52.3% of the days. So, by having just 50.9% odds of rising today, the stock market today is facing somewhat stronger head winds than usual.
Earnings Have Been Good
“We have a good background for stocks,” said Kurt Brunner, a Philadelphia-based money manager who helps oversee $1.2 billion at Swarthmore Group Inc. “Earnings for the most part have been good and the economic figures have improved. China raising interest rates is just a hiccup because they’re still going to have strong growth,” he said. “Investors are able to shrug off the pessimism and look at the good fundamentals.”
Pay Attention
For all but the most short-term of day traders, however, you need not pay much attention to the minute differences in these probabilities — statistically significant though they may otherwise be. One of the hallmarks of an efficient market is that the market’s direction in a given trading session is independent of what it did the previous day.
Small Business
Confidence among U.S. small companies, which are responsible for creating about 65 percent of all jobs, rose in January to the highest level in three years, according to the National Federation of Independent Business optimism Index. Reports later this week are forecast to show initial jobless claims decreased and consumer confidence grew.