US Market Analysis -- 28th Jan 09

DJI closed 8,077.56 for the week ended 23rd Jan 09, down 203.66 points or 2.46% from previous week.
Nasdaq closed 1,477.29 for the week ended 23rd Jan 09, down 52.04 points or 3.40% from previous week.
S&P500 closed 831.95 for the week ended 23rd Jan 09, down 18.17 points or 2.14% from previous week.
Crude oil price finished the week at US$45.98/barrel as compared with previous week of US$42.27/barrel.

US markets didn't quite rally for Obama's inauguration on 20th Jan 09 as most anticipated when investors focusing on the bad financial news like RBS needed UK government bailout, corporate earnings and economic data. There were mixture of good and bad corporate earnings emerging for the week. IBM, Google and Apple beat market expectation with their result but Intel, Microsoft and GE fared the opposite. US banks were in focus again when news of fresh round of bailout required. Economic data like Jobless Claims and Housing Starts didn't fare better either as this made investors worried of recession might be deepening.

A recap of last week US economic data/event is as followed.

1. 22nd Jan 09, Housing Starts reported 0.550M, expectation 0.615M and previous value 0.625M.
2. 22nd Jan 09, Jobless Claims came in 589K, consensus 610K, previous value 524K.

Economic data/events for the coming week is as followed

1. 26th Jan 09, Existing Home Sales, Leading Indicators
2. 27th Jan 09, Consumer Confidence
3. 28th Jan 09, FOMC Meeting Announcement,
   
4. 29th Jan 09, Durable Goods Orders, Jobless Claims, New Home Sales
5. 30th Jan 09, GDP, Employment Cost Index, Consumer Sentiment
   

Technically, DJI long term trend is sideway while short-term is bias towards the downside. DI pair is negatively spaced and with ADX signal rising towards the 40 level, this is of something worrying as if ADX signal hit 40 and above with the DI pair still negatively spaced, the downward trend will be of strong momentum. RSI has dropped into the oversold region and no sign of rebound in short-term. Stochastic lying flattish around the 20% level and could either rebound up or breaking down suddenly. For the week, DJI was trading in a range of between 8,000 to 8,300 level with few of days hitting below the 8,000 level. The 8,000 level is of critical now as if the support could not hold, first level of target on the downside would be re-testing the 7,500 level. Some analysts even predicting DJI could correct down to 6,000 level. Don't rule that out. However, if there is a reverse in the downtrend, a breakout from 8,300 would possible seeing DJI trying to re-test the 9,000 level.


Technically, Nasdaq long term trend is sideway while short-term is bias towards the downside. DI pair is negatively spaced but with ADX signal rising this could cause concern that the downside is gathering momentum. RSI is heading towards the 30% level with no sign of reversal in short-term. Stochastic is flattish at the 20% level and could be either rebound up or further breaking down any moment. Nasdaq was trading in a range between 1,440 to 1,520 for the week. A breakdown at 1,440 level would see it going down to re-test the 1,310 level and a breakout from the 1,520 level will possible seeing it re-test the 1,620 level.


Technically, S&P500 long term trend is sideway with short-term bias towards the downside. DI pair is negatively spaced and with ADX signal rising towards the 40 level this is very much worrying as indicating downside is gather momentum. RSI has just dipped into the oversold region and no sign of rebound in short-term. Stochastic lying flattish around the 20% level and though it appears to cut up but with ADX and RSI indicating weakness, the rebound will have no strength. S&P500 was trading in a range between 800 to 850 level for the week. A breakdown at 800 level would see it re-testing the 750 level and a breakout from the 850 level would see it re-testing the 900 level.


For the coming week, it appears to be a critical week for US markets as a make or break week. Several critical economic data were due the coming week with GDP number, Existing/New Home Sales and Durable Goods Orders. Furthermore, there will be a FOMC meeting from 27th - 28th Jan 09. Though US Federal Reserve could no longer play with the interest rate to effect the ailing economy, investors will be very keen to know what other measures the US Federal Reserve has to salvage the ailing economy. Any measures that market dislike might send the markets crushing to re-test their Oct 08 low. Meanwhile President Obama is pushing the Congress to approve its stimulus package and if that could be sorted out ASAP, markets might have something to cheer about. Corporate earnings will also be in focus in the coming week. A point to note is that crude oil price has been rising and worth monitoring for it.