Thursday, November 4, 2010

Daily Dow Jones Comment, 4/11/2010

Wall Street Dow Jones ended a choppy session, fluctuating between -91 points and +38 points before ending 25 points higher at 11215 amid a widely-anticipated Republican victory and the Fed's announcement of a QE2 of US$600bn. It is the highest since September 2008.

The Fed said it will buy US$600bn in long-term (consensus:US$500bn to $1 trillion) Treasuries by the middle of next year, at the pace of $75 billion a month. Meanwhile, better than expected September factory orders, Oct ISM services index
and Oct ADP reports further lifted market sentiment.

As the Dow already surged 14.7% since end June and the results of the mid-term election and FOMC decision were largely within market expectation, Dow is likely to begin its consolidation with upside potential capped around 11300-11500. Unless the impending release of the Oct nonfarm payrolls this Friday spring some positive surprises following a better than expected ADP job report overnight, the Dow
will still trap within the range bound trading box of 10900-11300 in the near term.

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