Profit Takers Floods In

FUNDAMENTAL ANALYSIS
The Dow was up as high as 13522.60 points early in the trading session today following the biggest surge in new home sales in 14 years by 16%. Profit takers needing a "high enough" point as an excuse to start retreating from the market started pouring in almost immediately, bringing the Dow back down to 13441.13 by the end of the day. The surge in new home sales seems to suggest that the market is beginning to consolidate at the current levels strongly, forming a support and a possible "bottom" to the housing market correction so far. This is an extremely important and encouraging data as the falling property market remains one of the biggest threat to the economy and the stock market. It is a good thing the profit takers are taking the opportunity to exit so that a new wave of buying interest may enter the market.

TECHNICAL ANALYSIS
Once again, the Dow has broken it's staircase formation in a similar fashion as what it did back on 10 May. The drop today has also helped take the Dow off being short term overbought and could set the stage for more upside. Tomorrow is going to be a critical day again. If the Dow should rise tomorrow significantly, the staircase formation could be resumed like it did back on 11 May, if not, then we could be witnessing the start of the long awaited correction. Even if the correction should continue, it should find support somewhere around the 30MA level. It is a tricky market to do anything new now and definitely not an area where one should start accumulating... yet.


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