Bulls Returned On Great GDP Despite Higher Oil Price

FUNDAMENTAL ANALYSIS
Today is really the war of the Titans in the stock market as a heavy weight good news battles a heavy weight bad news. The much better than expected GDP and initial claims data released before stock market opened helped the market open nice and high today. However, when oil prices break above $66, optimism started fading away as stocks started trading in negative territory. Just when all hopes seemed gone, the bulls returned in force on the final hour, closing the Dow up 48.39 points and the Nasdaq composite up marginally by 0.78 points. The final hour surge looked like it was the result of some systematic, institutional bargain hunting more than mass concensus as trading volume was low but the impact was powerful. Tomorrow, the heavy weight PMI numbers could give a further boost to the stock market if it turns out favorable, IF, oil prices don't rally to yet another new high. It does seem like all factors are in line for oil prices to move higher with summer approaching and mounting tension in the middle-east. Yes, tension between US and Iran has yet escalated as the US conducts the biggest scale carrier battle group exercise just off Iranian waters. War is never encouraging to the stock markets and making war when one's economy is slowing down can only be akin to a slow suicide. Let's hope things work out just fine.

TECHNICAL ANALYSIS
Major indices made a surprise gain today and made a kink in the Tower Formation in the Dow. There was clearly some bullishness in the market today, however, the declining volume and continued indication of downside momentum by the short term MACD and stochastics indicators, do not give it much credibility. It clearly didn't take any rocket science indicator to tell that tale as we call all see from the intraday charts that the Dow was in negative territory for most of the day. I, once again, suspect that the stock market is trying to pull up a loose sock. In fact, from the strong downside momentum that still prevails and the weak show of force today, I suspect that tomorrow, the Dow would regain its tower formation path and head back down to the 12100 level as per the game plan.


Technical Chart By Worden Brothers TC2007 Charting Software
Voted Best Software By Readers Of Stocks & Commodity Magazine Since 1993!