Monday, January 10, 2011

Dow Jones Is Likely To Consolidate As The 4Q2010 Reporting Seasons Start, 10-01-2011

Dow down 22 points on weak job data and the court ruling on foreclosure case (Wells Fargo and US Bancorp), sparking a sell-off in bank stocks.

Sentiment was also dampened by the Dec 10’s nonfarm payrolls growth of 103k, rising from an upwardly revised 71k in November but below consensus 150k. Nevertheless, unemployment rate fell to 9.4%, lowest in more than 1-and-a-half years.

Following the jobs report, Federal Reserve Chairman Ben Bernanke told the Senate Budget Committee there is increased evidence that a self-sustaining recovery may be taking hold. He added that the pace of the recovery will be "moderately stronger
in 2011 than it was in 2010.

Following two consecutive decline in Dow amid rising jobless claims and weak job data, we expect more consolidation ahead as the 4Q10 reporting season begins. Immediate resistance level is 11906 (upper weekly Bollinger band) whilst support level is 11561 (middle Bollinger band) and 11362 (50-d SMA).

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