Stocks Closed Mixed Amidst Rising Oil Price And Falling Home Sales

FUNDAMENTAL ANALYSIS
New home sales fell by 3.2% in February while oil price nears the $63 mark amidst tension in the middle east. Even with all these troubling news, stocks managed to close mixed with the Dow down by only a small margin of 11.94. This is due in part to the offsetting effect of a rising energy sector against a falling homebuilder sector. Obviously the home market continues to be weak and expectedly so as real estate investors continue to be cautious in this very sensitive and weak sector. However, analysts are saying that it is unlikely to bring the economy into a recession. So far, we have observed that the home market is indeed coming to a rather smooth and soft landing over the past year. As for the rising oil price, I do not see it as a serious threat to the stock market yet as it has been expected to rise ahead of a higher demand summer. Tomorrow, we shall recieve the consumer confidence numbers and is again likely going to be a market mover.

TECHNICAL ANALYSIS
The Dow and the Nasdaq composite continue to close sideways today as they struggle to break their respective resistance levels. As I have mentioned before, it is normal for the indices to go sideways for a few days following every big move like the one we saw on 21 March 07 and indeed, it has played out that way quite nicely. Such sideways behavior commonly lasts from 3 to 5 days and then stage another breakout. At this point in time, I can only give the possibility of a breakout a 50/50 chance. The 12500 level has proved to be a pretty strong resistance level as the Dow has failed that that level for 4 consecutive days. Most sideways movements following a surge should still see an inclination to upside should the trend be a strong one. So far, we have seen both the Dow and the Nasdaq composite stop short at almost the exact same level for the past 4 days. That, along with the fact that both indices are in their short term overbought position, suggests strongly to me that they may even laspe back down into a tower formation from this point forward. Until more evidence points to the contrary, my take remains Baby bull (neutral with inclination to upside).


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