Swing Trading Strategies & Stock Picks Since 2003

Dow Jones Industrial Average

8^th Oct 09

Key Statistics

Open: 9728.22

High: 9836.67

Low: 9728.07

Close: 9786.87

Change: +61.29 (+0.63%)

Prev Close: 9725.58

RSI: 47.84

MACD: 59.51

Snapshot

• Dow ended +61.29 (+0.63%) points higher, S&P 500 rose 0.8% and Nasdaq rose 0.6%.
• Markets upbeat on expectations of better than expected results
• Gold closes at a record high
• Unemployment claims data better than expected
• Retailers post strong sales figures

Current Market view – Cautious

Market Strategy

Traders/Investors are advised to let the profits run & use any correction as a buying opportunity. One should make long positions on every dip.

Market Commentary

Markets gained for the third time in last 4 days as investors became upbeat about the earnings season. Alcoa Inc. set the positive tone for the markets on Wednesday after the company’s results beat analysts’ estimates. The company reported a profit of $77 million after a long gap.

Falling dollar continued to helped commodity prices. Gold closed at a record high of $1,056.30 an ounce. The sharp rally in gold has been surprising as it is seen as a hedge against bad times. Rally in the gold prices suggest that market players are looking to hedge against further fall in US $ in near future.

Adding to positive sentiment, U.S. retailers posted generally strong same-store sales figures.  The numbers were better as compared to previous months.  Macy’s shares rose 5.1% after the company reported better than expected sales numbers.

New jobless claims for the week ending October 3 fell to 521,000 which were lower than expected. Continuing claims also came in better than expected as they fell to 6.04 million.

Once again, the positive economic reports are helping the markets stay if troubled waters. The markets have been rallying since Mar 09 lows on the back of expectations of a recovery and support by positive news flow. But the question remains in the mind of investors as to how much the market can go higher from here. Dow 10,000 is seen as psychological level where the markets could face some resistance.

As the earnings season unfolded with Alcoa results, investors will be looking forward to the future guidance issued by the various big corporate houses. Last quarter many companies reported better than expected results on the back of various cost-cutting measures. Investors will be looking forward if there are any signs of revenue growth in various businesses.

U.S. crude oil futures prices gained $2.12, or 3 percent, to settle at $71.69 a barrel, pushing shares of Chevron Corp. up 1.3 percent at $71.45.

21 of the 30 Dow components ended the session in green. Energy, materials and consumer sector lead the advance. American Express Co., Home Depot Inc., Caterpillar Inc and Microsoft Inc. were amongst the prominent gainers as all ended up more than 2%.

The Day Ahead

·        International Trade Report is due for release on Friday.